DEFM14A 1 d435502ddefm14a.htm DEFM14A DEFM14A
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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

(Amendment No.    )

 

 

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 §240.14a-12

VELODYNE LIDAR, INC.

(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 paid previously with preliminary materials.

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 


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LOGO   

LOGO

MERGER, REVERSE STOCK SPLIT & SHARE ISSUANCE PROPOSALS—YOUR VOTE IS VERY IMPORTANT

Dear Stockholders:

On November 4, 2022, Ouster, Inc., which is referred to as Ouster, Velodyne Lidar, Inc., which is referred to as Velodyne, Oban Merger Sub, Inc., a direct, wholly-owned subsidiary of Ouster, which is referred to as Merger Sub I, and Oban Merger Sub II LLC, a direct, wholly-owned subsidiary of Ouster, which is referred to as Merger Sub II, entered into an Agreement and Plan of Merger, as it may be amended from time to time, which is referred to as the merger agreement, pursuant to which they agreed to combine their respective businesses in a merger of equals. We expect the combined company to help create a vibrant and healthy lidar industry by offering affordable, high-performance sensors to drive mass adoption across a wide variety of customer applications. Pursuant to the terms of the merger agreement, Merger Sub I will merge with and into Velodyne, which transaction is referred to as the first merger, with Velodyne as the surviving corporation in the first merger and as soon as practicable after the first merger and as the second step in a single integrated transaction with the first merger, Velodyne will merge with and into Merger Sub II, which transaction is referred to as the second merger, with Merger Sub II as the surviving company and a direct, wholly-owned subsidiary of Ouster. The first merger and the second merger together are referred to as the mergers. Unless and until the parties agree that the combined company should have a different name than what is currently set forth in the charter of Ouster, the combined company’s name will be “Ouster, Inc.”

Upon successful completion of the first merger, each issued and outstanding share of Velodyne common stock as of immediately prior to the completion of the first merger (other than shares owned by Velodyne, Ouster, Merger Sub I or Merger Sub II or any wholly owned subsidiary thereof (or that are held in treasury by Velodyne)) will be converted into the right to receive 0.8204 shares of Ouster common stock, which number is referred to as the exchange ratio, and cash in lieu of any fractional shares of Ouster common stock any former holder of Velodyne common stock would otherwise be entitled to receive. This exchange ratio is fixed and will not be adjusted for changes in the market price of either Ouster common stock or Velodyne common stock between the dates of signing of the merger agreement and completion of the mergers. Upon completion of the mergers, Ouster stockholders will continue to own their existing Ouster shares. Ouster stockholders will own approximately 50% and Velodyne stockholders will own approximately 50% of the issued and outstanding shares of the combined company (based on fully diluted shares outstanding of the combined company including equity awards) immediately following the completion of the mergers. Ouster common stock is traded on the New York Stock Exchange, which is referred to as the NYSE, under the symbol “OUST.” Velodyne common stock is traded on the Nasdaq Global Select Market, which is referred to as the Nasdaq, under the symbol “VLDR.” The common stock of the combined company is expected to be listed on the NYSE under the symbol “OUST.”

Ouster and Velodyne will each hold special meetings of their respective stockholders in connection with the proposed mergers, which are referred to as the Ouster special meeting and the Velodyne special meeting, respectively.

At the Ouster special meeting, Ouster stockholders will be asked to consider and vote on (1) the proposal to approve the issuance of shares of Ouster common stock to Velodyne equityholders pursuant to the merger agreement, which proposal is referred to as the Ouster share issuance proposal, (2) the proposal to approve an amendment to the Ouster charter to allow Ouster to have the option to effect a reverse stock split of Ouster common stock separate from and following the closing of the mergers, which proposal is referred to as the Ouster reverse stock split proposal and (3) the proposal to adjourn the Ouster special meeting to solicit additional proxies if there are not sufficient votes to approve the Ouster share issuance proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Ouster stockholders. The board of directors of Ouster unanimously recommends that Ouster stockholders vote “FOR” each of the proposals to be considered at the Ouster special meeting.

At the Velodyne special meeting, Velodyne stockholders will be asked to consider and vote on (1) the proposal to adopt the merger agreement, which is referred to as the Velodyne merger agreement proposal, (2) the proposal to approve, on a non-binding advisory basis, the compensation that will or may be paid to Velodyne’s named executive officers that is based on or otherwise relates to the transactions contemplated by the merger agreement and (3) the proposal to adjourn the Velodyne special meeting to solicit additional proxies if there are not sufficient votes to approve the Velodyne merger agreement proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Velodyne stockholders. The board of directors of Velodyne unanimously recommends that Velodyne stockholders vote “FOR” each of the proposals to be considered at the Velodyne special meeting.

The merger agreement requires, as a condition to closing of the mergers and the other transactions contemplated by the merger agreement, that Ouster stockholders approve the Ouster share issuance proposal and that Velodyne stockholders approve the Velodyne merger agreement proposal. Your vote on these matters, as well as other proposals, is very important, regardless of the number of shares you own. Whether or not you plan to attend your respective special meeting in person, please promptly mark, sign and date the accompanying proxy card and return it in the enclosed postage-paid envelope or authorize the individuals named on your proxy card to vote your shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with your proxy card.

The accompanying joint proxy statement/prospectus provides you with important information about the special meetings, the mergers, and each of the proposals. We encourage you to read the entire document carefully, in particular the “Risk Factors” section beginning on page 24 of the accompanying joint proxy statement/prospectus for a discussion of risks relevant to the mergers.

We look forward to the successful completion of the mergers.

Sincerely,

 

LOGO

 

Angus Pacala

Chief Executive Officer and Co-Founder

Ouster, Inc.

    

LOGO

 

Theodore L. Tewksbury, Ph.D.

Chief Executive Officer

Velodyne Lidar, Inc.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the mergers or the Ouster common stock to be issued in the mergers or determined if the accompanying joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying joint proxy statement/prospectus is dated December 8, 2022 and is first being mailed to the stockholders of Ouster on or about December 14, 2022 and to the stockholders of Velodyne on or about December 9, 2022.


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LOGO

Ouster, Inc.

350 Treat Avenue

San Francisco, California 94110

(415) 949-0108

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON JANUARY 26, 2023

To the Stockholders of Ouster, Inc.

Notice is hereby given that Ouster, Inc., which is referred to as Ouster, will hold a completely virtual special meeting of its stockholders, which is referred to as the Ouster special meeting, at the Ouster special meeting website, at www.virtualshareholdermeeting.com/OUST2023SM, on January 26, 2023, beginning at 9 a.m., Pacific Time, for the purpose of considering and voting on the following proposals:

(1) to approve the issuance of shares of Ouster common stock (including securities convertible into or exercisable for shares of Ouster common stock) to certain equityholders of Velodyne Lidar, Inc., which is referred to as Velodyne, pursuant to the Agreement and Plan of Merger, dated as of November 4, 2022 (as it may be amended from time to time), by and among Ouster, Oban Merger Sub, Inc., a wholly-owned subsidiary of Ouster, Oban Merger Sub II LLC, a wholly-owned subsidiary of Ouster, and Velodyne, which is referred to as the merger agreement, a copy of which is included as Annex A to the accompanying joint proxy statement/prospectus, which proposal is referred to as the Ouster share issuance proposal;

(2) to approve an amendment to the Ouster charter to allow Ouster, (a) to have the option to effect, separate from and following the closing of the mergers, or (b) if the merger agreement is terminated, to have the option to effect (i) a reverse stock split of Ouster common stock at one of six reverse stock split ratios, one-for-five, one-for-six, one-for-seven, one-for-eight, one-for-nine and one-for-ten, with an exact ratio to be determined by the board of the combined company following the closing or the Ouster board, as applicable, and (ii) if and when the reverse stock split is effected, a corresponding reduction in the number of authorized shares of Ouster common stock by the selected reverse stock split ratio, which is referred to as the Ouster authorized share reduction, in the form attached as Annex B to the accompanying joint proxy statement/prospectus, which proposal is referred to as the Ouster reverse stock split proposal (approval of which is not conditioned upon approval of the Ouster share issuance proposal or on completion of the mergers); and

(3) to approve the adjournment of the Ouster special meeting to solicit additional proxies if there are not sufficient votes at the time of the Ouster special meeting to approve the Ouster share issuance proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Ouster stockholders, which proposal is referred to as the Ouster adjournment proposal.

Ouster will transact no other business at the Ouster special meeting except such business as may properly be brought before the Ouster special meeting or any adjournment or postponement thereof. The accompanying joint proxy statement/prospectus, including the merger agreement attached thereto as Annex A, contains further information with respect to these matters.

Only holders of record of Ouster common stock at the close of business on December 13, 2022, the record date for notice of and voting at the Ouster special meeting, which is referred to as the Ouster record date, are entitled to notice of and to vote at the Ouster special meeting.


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The board of directors of Ouster, which is referred to as the Ouster board of directors, has approved and declared advisable the merger agreement and the transactions contemplated by the merger agreement, including the Ouster share issuance proposal and the Ouster reverse stock split proposal, on the terms and subject to the conditions set forth in the merger agreement. The Ouster board of directors unanimously recommends that Ouster stockholders vote “FOR” the Ouster share issuance proposal, “FOR” the Ouster reverse stock split proposal and “FOR” the Ouster adjournment proposal.

Your vote is very important, regardless of the number of shares of Ouster common stock you own. The merger agreement requires, as a condition to closing of the mergers and the other transactions contemplated by the merger agreement, that Ouster stockholders approve the Ouster share issuance proposal. Assuming a quorum is present, the approval of the Ouster share issuance proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast at the Ouster special meeting on the Ouster share issuance proposal.

A complete list of Ouster stockholders as of the record date will be open to the examination of any Ouster stockholder at Ouster’s principal executive offices at 350 Treat Avenue, San Francisco, California for a period of 10 days prior to the Ouster special meeting. This list of stockholders will also be available on the bottom panel of your screen during the meeting after entering the 16-digit control number included on the proxy card that you received, or on the materials provided by your bank or broker.

Whether or not you plan to attend the Ouster special meeting electronically, Ouster urges you to please promptly mark, sign and date the accompanying proxy card and return it in the enclosed postage-paid envelope, call the toll-free telephone number or use the Internet as described in the instructions included with the proxy card, so that your shares may be represented and voted at the Ouster special meeting. To participate electronically in the Ouster special meeting, you will need the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials. The meeting webcast will begin promptly at 9 a.m., Pacific Time. If your shares are held in street name through a bank, broker or other nominee, you will receive instructions on how to vote from the bank or broker. You must follow their instructions in order for your shares to be voted. Internet and telephone voting also may be offered to stockholders owning shares through certain banks and brokers. If your shares are not registered in your own name and you would like to vote your shares at the Ouster special meeting, you may visit www.virtualshareholdermeeting.com/OUST2023SM and enter the 16-digit control number included in the voting instruction card provided to you by your bank or brokerage firm. If you hold your shares in street name and you do not receive a 16-digit control number, you may need to log in to your bank or brokerage firm’s website and select the shareholder communications mailbox to access the meeting and vote. Instructions should also be provided on the voting instruction card provided by your bank or brokerage firm. The use of video, still photography or audio recording at the Ouster special meeting is not permitted. If you have any questions about the mergers or how to vote or direct a vote in respect of your shares of Ouster common stock, you may contact our proxy solicitor, MacKenzie Partners, Inc., at (212) 929-5500 (Call Collect) or (800) 322-2885 (Call Toll-Free).

 

By Order of the Ouster Board of Directors,

LOGO

Angus Pacala

Chief Executive Officer and Co-Founder

San Francisco, CA

Dated: December 14, 2022

 

Your vote is important. Ouster stockholders are requested to complete, date, sign and return the enclosed proxy card in the envelope provided, which requires no postage if mailed in the United States, or to submit a proxy to vote your shares electronically through the Internet or by telephone.


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LOGO

Velodyne Lidar, Inc.

5521 Hellyer Avenue

San Jose, CA 95138

(669) 275 2251

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON JANUARY 26, 2023

To the Stockholders of Velodyne Lidar, Inc.

Notice is hereby given that Velodyne Lidar, Inc., which is referred to as Velodyne, will hold a special meeting of its stockholders, which is referred to as the Velodyne special meeting, at 5521 Hellyer Avenue, San Jose, CA 95138, on January 26, 2023, beginning at 9 a.m., Pacific Time, for the purpose of considering and voting on the following proposals:

(1) to adopt the Agreement and Plan of Merger, dated November 4, 2022 (as it may be amended from time to time), by and among Ouster, Inc., referred to as “Ouster”, Oban Merger Sub, Inc., a wholly owned subsidiary of Ouster, Oban Merger Sub II LLC, a wholly owned subsidiary of Ouster, and Velodyne, which is referred to as the merger agreement, a copy of which is included as Annex A to the accompanying joint proxy statement/prospectus, which proposal is referred to as the Velodyne merger agreement proposal;

(2) to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Velodyne’s named executive officers that is based on or otherwise relates to the transactions contemplated by the merger agreement, which proposal is referred to as the Velodyne compensation proposal; and

(3) to approve the adjournment of the Velodyne special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Velodyne special meeting to approve the Velodyne merger agreement proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Velodyne stockholders, which proposal is referred to as the Velodyne adjournment proposal.

Velodyne will transact no other business at the Velodyne special meeting except such business as may properly be brought before the Velodyne special meeting or any adjournment or postponement thereof. The accompanying joint proxy statement/prospectus, including the merger agreement attached thereto as Annex A, contains further information with respect to these matters.

Only holders of record of Velodyne common stock at the close of business on December 5, 2022, the record date for notice of and voting at the Velodyne special meeting, which is referred to as the Velodyne record date, are entitled to notice of and to vote at the Velodyne special meeting.

The board of directors of Velodyne, which is referred to as the Velodyne board of directors, has unanimously determined that the merger of Merger Sub I with and into Velodyne and the subsequent merger of Velodyne with and into Merger Sub II, which are referred to as the “mergers”, are fair to and in the best interests of Velodyne and its stockholders, and approved and declared advisable the merger agreement and the transactions contemplated by the merger agreement, including the mergers, on the terms and subject to the conditions set forth in the merger agreement. The Velodyne board of directors unanimously recommends that Velodyne stockholders vote “FOR” the Velodyne merger agreement proposal, “FOR” the Velodyne compensation proposal and “FOR” the Velodyne adjournment proposal.


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Your vote is very important, regardless of the number of shares of Velodyne common stock you own. The merger agreement requires, as a condition to closing of the mergers and the other transactions contemplated by the merger agreement, that Velodyne stockholders approve the Velodyne merger agreement proposal. Assuming a quorum is present at the Velodyne special meeting, the approval of the Velodyne merger agreement proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Velodyne common stock entitled to vote at the Velodyne special meeting on the Velodyne merger agreement proposal.

Whether or not you plan to attend the Velodyne special meeting in person, Velodyne urges you to please promptly mark, sign and date the accompanying proxy card and return it in the enclosed postage-paid envelope, call the toll-free telephone number or use the Internet as described in the instructions included with the proxy card, so that your shares may be represented and voted at the Velodyne special meeting. If you hold your shares through a broker, bank or other nominee in “street name” (instead of as a registered holder) and you wish to vote in person at the Velodyne special meeting, you must obtain a legal proxy from your bank, broker or other nominee and bring the legal proxy to the meeting in order to vote in person at the Velodyne special meeting. You will need to bring identification along with either your notice of special meeting or proof of stock ownership to enter the Velodyne special meeting. The use of video, still photography or audio recording at the Velodyne special meeting is not permitted. For the safety of attendees, all bags, packages and briefcases are subject to inspection. If you have any questions about the mergers or how to vote or direct a vote in respect of your shares of Velodyne common stock, you may contact our proxy solicitor, Kingsdale Advisors, at (646)-851-2790 (Call Collect) or (877)-659-1821 (Call Toll-Free).

 

By Order of the Velodyne Board of Directors,

LOGO

Ted Tewksbury

Chief Executive Officer

San Jose, CA

Dated: December 8, 2022

 

Your vote is important. Velodyne stockholders are requested to complete, date, sign and return the enclosed proxy card in the envelope provided, which requires no postage if mailed in the United States, or to submit a proxy to vote your shares electronically through the Internet or by telephone.


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REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about Ouster, Inc., which is referred to as Ouster, and Velodyne Lidar, Inc., which is referred to as Velodyne, from other documents that Ouster and Velodyne have filed with the U.S. Securities and Exchange Commission, which is referred to as the SEC, and that are contained in or incorporated by reference into this joint proxy statement/prospectus. For a listing of documents incorporated by reference into this joint proxy statement/prospectus, please see the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus. This information is available for you free of charge to review through the SEC’s website at www.sec.gov.

Any person may request a copy of this joint proxy statement/prospectus and any of the documents incorporated by reference into this joint proxy statement/prospectus or other information concerning Ouster or Velodyne, without charge, by written or telephonic request directed to the appropriate company or its proxy solicitor at the following contacts:

 

For Ouster stockholders:
Ouster, Inc.
350 Treat Avenue
San Francisco, California 94110
(415) 949-0108
Attention: Corporate Secretary
   For Velodyne stockholders:
Velodyne Lidar, Inc.
5521 Hellyer Avenue
San Jose, California 95138
(669) 275-2251
Attention: Corporate Secretary
MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, New York 10018
(212) 929-5500 (Call Collect)
Call Toll-Free: (800) 322-2885
proxy@mackenziepartners.com
   Kingsdale Advisors
745 Fifth Avenue, 5th Floor
New York, New York 10151
(646)-851-2790 (Call Collect)
Call Toll-Free: (877)-659-1821
contactus@kingsdaleadvisors.com

In order for you to receive timely delivery of the documents in advance of the special meeting of Ouster stockholders to be held on January 26, 2023, which is referred to as the Ouster special meeting, or the special meeting of Velodyne stockholders to be held on January 26, 2023, which is referred to as the Velodyne special meeting, as applicable, you must request the information no later than seven calendar days prior to the applicable special meeting.

The contents of the websites of the SEC, Ouster, Velodyne or any other entity are not being incorporated into this joint proxy statement/prospectus. The information about how you can obtain certain documents that are incorporated by reference into this joint proxy statement/prospectus at these websites is being provided only for your convenience.

 

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ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form S-4 filed with the SEC by Ouster, constitutes a prospectus of Ouster under Section 5 of the Securities Act of 1933, as amended, which is referred to as the Securities Act, with respect to the shares of common stock of Ouster to be issued to Velodyne stockholders pursuant to the Agreement and Plan of Merger, dated as of November 4, 2022 (as it may be amended from time to time), by and among Ouster, Velodyne, Merger Sub I and Merger Sub II, which is referred to as the merger agreement. This document also constitutes a joint proxy statement of Ouster and Velodyne under Section 14(a) of the Securities Exchange Act of 1934, as amended, which is referred to as the Exchange Act. It also constitutes a notice of meeting with respect to the Ouster special meeting and a notice of meeting with respect to the Velodyne special meeting.

Ouster has supplied all information contained or incorporated by reference into this joint proxy statement/prospectus relating to Ouster, and Velodyne has supplied all such information relating to Velodyne. Ouster and Velodyne have both contributed to the information related to the mergers contained in this joint proxy statement/prospectus.

You should rely only on the information contained in or incorporated by reference into this joint proxy statement/prospectus. Ouster and Velodyne have not authorized anyone to provide you with information that is different from that contained in or incorporated by reference into this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated December 8, 2022, and you should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than such date unless otherwise specifically provided herein.

Further, you should not assume that the information incorporated by reference into this joint proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this joint proxy statement/prospectus to Ouster stockholders or Velodyne stockholders nor the issuance by Ouster of shares of its common stock pursuant to the merger agreement will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

Unless otherwise indicated or the context otherwise requires, when used in this joint proxy statement/prospectus:

 

   

“Barclays” refers to Barclays Capital, Inc., financial advisor to Ouster in connection with the mergers;

 

   

“BofA Securities” refers to BofA Securities, Inc., financial advisor to Velodyne in connection with the mergers;

 

   

“business day” refers to any day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close;

 

   

“Code” refers to the Internal Revenue Code of 1986, as amended;

 

   

“combined company” refers to Ouster following the completion of the mergers;

 

   

“DGCL” refers to the General Corporation Law of the State of Delaware;

 

   

“effective time” refers to the date and time when the first merger becomes effective under the DGCL, which will be the date and time at which the certificate of merger with respect to the first merger is filed with the Secretary of State of the State of Delaware, or such other time as may be mutually agreed to by Ouster and Velodyne and specified in the applicable certificate of merger;

 

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“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

 

   

“Exchange Agent” refers to Continental Stock Transfer & Trust Company, N.A.;

 

   

“exchange ratio” refers to 0.8204 of a fully-paid and nonassessable share of Ouster common stock;

 

   

“first merger” refers to the merger of Merger Sub I with and into Velodyne, with Velodyne continuing its existence under the laws of the State of Delaware as the surviving corporation;

 

   

“GAAP” refers to U.S. generally accepted accounting principles;

 

   

“HSR Act” refers to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;

 

   

“mergers” refers to the first merger and second merger, collectively;

 

   

“merger agreement” refers to the Agreement and Plan of Merger, dated as of November 4, 2022, as it may be amended from time to time, by and among Ouster, Velodyne, Merger Sub I and Merger Sub II;

 

   

“merger consideration” refers to the consideration that a Velodyne stockholder is entitled to receive in exchange for such Velodyne stockholder’s shares of Velodyne common stock in connection with the mergers;

 

   

“Merger Sub I” refers to Oban Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Ouster, formed for the purpose of effecting the mergers;

 

   

“Merger Sub II” refers to Oban Merger Sub II LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of Ouster, formed for the purpose of effecting the mergers;

 

   

“Nasdaq” refers to the Nasdaq Global Select Market;

 

   

“NYSE” refers to the New York Stock Exchange;

 

   

“Ouster” refers to Ouster, Inc., a Delaware corporation;

 

   

“Ouster adjournment proposal” refers to the proposal for Ouster stockholders to approve the adjournment of the Ouster special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Ouster special meeting to approve the Ouster share issuance proposal;

 

   

“Ouster board of directors” refers to the board of directors of Ouster;

 

   

“Ouster bylaws” refers to the bylaws of Ouster;

 

   

“Ouster charter” refers to the certificate of incorporation of Ouster;

 

   

“Ouster common stock” refers to the common stock, par value $0.0001 per share, of Ouster;

 

   

“Ouster record date” refers to December 13, 2022;

 

   

“Ouster reverse stock split proposal” refers to a proposal for Ouster stockholders to approve an amendment to the Ouster charter to allow Ouster to have the option to effect, separate from and following the closing of the mergers, (a) a reverse stock split of Ouster common stock at one of six reverse stock split ratios, one-for-five, one-for-six, one-for-seven, one-for-eight, one-for-nine and one-for-ten, with an exact ratio to be determined by the board of the combined company following the closing, and (b) if and when the reverse stock split is effected, a corresponding reduction in the number of authorized shares of Ouster common stock by the selected reverse stock split ratio, in the form attached as Annex B to the accompanying joint proxy statement/prospectus;

 

   

“Ouster share issuance proposal” refers to the proposal for Ouster stockholders to approve the issuance of shares of Ouster common stock to Velodyne equityholders in connection with the mergers;

 

   

“Ouster special meeting” refers to the special meeting of Ouster stockholders to consider and vote upon the Ouster share issuance proposal, the Ouster reverse stock split proposal and the Ouster adjournment proposal;

 

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“Ouster special meeting website” refers to the website that Ouster stockholders can visit to attend and vote at the Ouster special meeting, accessible at the following web address: www.virtualshareholdermeeting.com/OUST2023SM;

 

   

“Ouster stockholders” refers to holders of Ouster common stock;

 

   

“SEC” refers to the U.S. Securities and Exchange Commission;

 

   

“second merger” refers to the merger of Velodyne with and into Merger Sub II, with Merger Sub II continuing in existence under the laws of the State of Delaware as the surviving company;

 

   

“Securities Act” refers to the Securities Act of 1933, as amended;

 

   

“Velodyne” refers to Velodyne Lidar, Inc., a Delaware corporation;

 

   

“Velodyne adjournment proposal” refers to the proposal for Velodyne stockholders to approve the adjournment of the Velodyne special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Velodyne special meeting to approve the Velodyne merger agreement proposal;

 

   

“Velodyne board of directors” refers to the board of directors of Velodyne;

 

   

“Velodyne board recommendation” refers to the unanimous recommendation of the Velodyne board of directors for Velodyne stockholders to approve the Velodyne merger agreement proposal;

 

   

“Velodyne bylaws” refers to the amended and restated bylaws of Velodyne;

 

   

“Velodyne charter” refers to the amended and restated certificate of incorporation of Velodyne;

 

   

“Velodyne common stock” refers to the common stock, par value $0.0001 per share, of Velodyne;

 

   

“Velodyne compensation proposal” refers to the proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Velodyne named executive officers that is based on or otherwise relates to the transactions contemplated by the merger agreement;

 

   

“Velodyne merger agreement proposal” refers to the proposal for Velodyne Stockholders to adopt the Merger Agreement and the transactions contemplated thereby, including the mergers;

 

   

“Velodyne record date” refers to December 5, 2022;

 

   

“Velodyne special meeting” refers to the special meeting of Velodyne stockholders to consider and vote upon the Velodyne merger agreement proposal, the Velodyne compensation proposal and the Velodyne adjournment proposal; and

 

   

“Velodyne stockholders” refers to holders of Velodyne common stock.

 

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REFERENCES TO ADDITIONAL INFORMATION

     i  

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

     ii  

QUESTIONS AND ANSWERS

     1  

SUMMARY

     1  

The Parties to the Mergers

     1  

The Mergers and the Merger Agreement

     1  

Exchange Ratio

     2  

Treatment of Existing Ouster Equity Awards

     2  

Treatment of Existing Velodyne Equity Awards

     2  

Ouster’s Recommendation and Reasons for the Mergers

     3  

Velodyne’s Recommendation and Reasons for the Mergers

     4  

Opinion of Barclays, Ouster’s Financial Advisor

     5  

Opinion of BofA Securities, Velodyne’s Financial Advisor

     5  

The Ouster Special Meeting

     6  

The Velodyne Special Meeting

     6  

Interests of Ouster’s Directors and Executive Officers in the Mergers

     7  

Interests of Velodyne’s Directors and Executive Officers in the Mergers

     8  

Governance of the Combined Company

     8  

Certain Beneficial Owners of Ouster Common Stock

     9  

Certain Beneficial Owners of Velodyne Common Stock

     9  

Regulatory Approvals

     10  

Ownership of the Combined Company after the Mergers

     10  

No Appraisal Rights

     10  

Conditions to the Completion of the Mergers

     10  

No Solicitation of Competing Proposals

     11  

No Change of Recommendation

     12  

Termination of the Merger Agreement

     13  

Termination Fees

     14  

Voting and Support Agreement

     15  

Accounting Treatment

     17  

Certain Tax Matters

     17  

Comparison of Stockholders’ Rights

     17  

Listing of Ouster Common Stock; Delisting and Deregistration of Velodyne Common Stock

     17  

Risk Factors

     18  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     19  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

     20  

COMPARISON OF OUSTER AND VELODYNE MARKET PRICES AND IMPLIED VALUE OF MERGER CONSIDERATION

     21  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     22  

RISK FACTORS

     24  

Risks Relating to the Mergers

     24  

Risks Relating to the Proposed Reverse Stock Split

     30  

Risks Relating to the Combined Company

     31  

Risks Relating to Ouster’s Business

     35  

Risks Relating to Velodyne’s Business

     35  

THE PARTIES TO THE MERGERS

     36  

Ouster, Inc.

     36  

Oban Merger Sub, Inc.

     36  

Oban Merger Sub II LLC

     36  

Velodyne Lidar, Inc.

     36  

 

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THE OUSTER SPECIAL MEETING

     38  

Date, Time and Place of the Ouster Special Meeting

     38  

Matters to be Considered at the Ouster Special Meeting

     38  

Recommendation of the Ouster Board of Directors

     38  

Record Date for the Ouster Special Meeting and Voting Rights

     39  

Quorum; Abstentions and Broker Non-Votes

     39  

Required Votes; Vote of Ouster’s Directors and Executive Officers

     40  

Methods of Voting

     41  

Revocability of Proxies

     42  

Proxy Solicitation Costs

     42  

Attending the Ouster Special Meeting

     43  

Householding

     43  

Tabulation of Votes

     43  

Adjournments

     43  

Assistance

     44  

OUSTER PROPOSAL #1: OUSTER SHARE ISSUANCE

     45  

OUSTER PROPOSAL #2: OUSTER REVERSE STOCK SPLIT PROPOSAL

     46  

U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT

     48  

OUSTER PROPOSAL #3: ADJOURNMENT OF THE OUSTER SPECIAL MEETING

     50  

THE VELODYNE SPECIAL MEETING

     51  

Date, Time and Place of the Velodyne Special Meeting

     51  

Matters to be Considered at the Velodyne Special Meeting

     51  

Recommendation of the Velodyne Board of Directors

     51  

Record Date for the Velodyne Special Meeting and Voting Rights

     52  

Quorum; Abstentions and Broker Non-Votes

     52  

Required Votes; Vote of Velodyne’s Directors and Executive Officers

     53  

Methods of Voting

     53  

Revocability of Proxies

     54  

Proxy Solicitation Costs

     55  

Attending the Velodyne Special Meeting

     55  

Householding

     56  

Tabulation of Votes

     56  

Adjournments

     56  

Assistance

     56  

VELODYNE PROPOSAL #1: VELODYNE MERGER AGREEMENT PROPOSAL

     58  

VELODYNE PROPOSAL #2: VELODYNE COMPENSATION PROPOSAL

     59  

VELODYNE PROPOSAL #3: VELODYNE ADJOURNMENT PROPOSAL

     60  

THE MERGERS

     61  

General

     61  

Exchange Ratio

     61  

Background of the Mergers

     62  

Recommendation of the Ouster Board of Directors; Ouster’s Reasons for the Mergers

     73  

Recommendation of the Velodyne Board of Directors; Velodyne’s Reasons for the Mergers

     77  

Opinion of Barclays, Ouster’s Financial Advisor

     82  

Opinion of BofA Securities, Velodyne’s Financial Advisor

     88  

Certain Financial Forecasts Utilized in Connection with the Mergers

     96  

Closing and Effective Time of the Mergers

     101  

Regulatory Approvals

     102  

Ownership of the Combined Company After the Mergers

     102  

Governance of the Combined Company

     102  

U.S. Federal Securities Law Consequences

     103  

Accounting Treatment

     103  

 

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Exchange of Shares

     103  

Market Listing

     104  

Delisting and Deregistration of Velodyne Common Stock

     104  

Litigation between Ouster and Velodyne

     104  

Litigation Relating to the Mergers

     104  

THE MERGER AGREEMENT

     105  

Explanatory Note Regarding the Merger Agreement

     105  

Structure of the Mergers

     105  

Completion and Effectiveness of the Mergers

     106  

Merger Consideration

     106  

Treatment of Velodyne Equity Awards

     107  

Exchange of Shares

     107  

Dividends and Distributions with Respect to Unexchanged Shares of Velodyne Common Stock

     108  

Treatment of Fractional Shares

     108  

Termination of the Exchange Fund

     108  

Withholding Rights

     109  

Adjustments to Prevent Dilution

     109  

Governance Matters

     109  

Representations and Warranties

     109  

Conduct of Business Prior to the Effective Time

     112  

No Solicitation of Competing Proposals

     114  

Notice Regarding Competing Proposals

     116  

No Change of Recommendation

     116  

Existing Discussions

     118  

Special Meetings

     118  

Cooperation; Efforts to Consummate

     119  

Status and Notifications

     120  

Access to Information

     120  

NYSE Listing; Nasdaq Delisting

     121  

Publicity

     121  

Employee Benefits Matters

     121  

Expenses

     122  

Directors’ and Officers’ Insurance and Indemnification

     122  

Litigation

     123  

Conditions to the Completion of the Mergers

     124  

Termination of the Merger Agreement

     125  

Termination Fees

     126  

Amendment

     127  

Waiver

     128  

Specific Performance

     128  

Third-Party Beneficiaries

     128  

THE ANCILLARY AGREEMENTS

     129  

Ouster Voting and Support Agreement

     129  

Velodyne Voting and Support Agreement

     130  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     133  

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

     138  

INTERESTS OF OUSTER’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGERS

     142  

Executive Officers

     142  

Ouster Change in Control

     142  

INTERESTS OF VELODYNE’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGERS

     146  

Executive Officers

     146  

Velodyne Change in Control

     146  

 

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U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGERS

     152  

U.S. Federal Income Tax Consequences of the Mergers to U.S. Holders of Velodyne Common Stock

     153  

COMPARISON OF STOCKHOLDERS’ RIGHTS

     155  

NO APPRAISAL RIGHTS

     170  

LEGAL MATTERS

     171  

EXPERTS

     172  

CERTAIN BENEFICIAL OWNERS OF OUSTER COMMON STOCK

     173  

Security Ownership of Ouster Directors and Executive Officers

     173  

Security Ownership of Other Beneficial Owners

     174  

CERTAIN BENEFICIAL OWNERS OF VELODYNE COMMON STOCK

     176  

Security Ownership of Velodyne Directors and Executive Officers

     176  

Security Ownership of Other Beneficial Owners

     177  

STOCKHOLDER PROPOSALS

     179  

Ouster

     179  

Velodyne

     179  

HOUSEHOLDING OF PROXY MATERIALS

     180  

WHERE YOU CAN FIND MORE INFORMATION

     181  

Ouster (SEC File No.  001-39463)

     181  

Velodyne (SEC File No.  001-38703)

     182  

ANNEX A: Agreement and Plan of Merger

     A-1  

ANNEX B: Form of Ouster Certificate of Amendment

     B-1  

ANNEX C: Bylaws of Ouster

     C-1  

ANNEX D: Form of Ouster Voting and Support Agreement

     D-1  

ANNEX E: Form of Velodyne Voting and Support Agreement

     E-1  

ANNEX F: Opinion of Barclays Capital Inc.

     F-1  

ANNEX G: Opinion of BofA Securities, Inc.

     G-1  

 

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QUESTIONS AND ANSWERS

The following are some questions that you, as a stockholder of Ouster or a stockholder of Velodyne, may have regarding the mergers and the other matters being considered at the special meetings of each company’s stockholders, and brief answers to those questions. You are urged to carefully read this joint proxy statement/prospectus and the other documents referred to in this joint proxy statement/prospectus in their entirety because this section may not provide all the information that is important to you regarding these matters. Additional important information is contained in the annexes to, and the documents incorporated by reference into, this joint proxy statement/prospectus. You may obtain the information incorporated by reference in this joint proxy statement/prospectus, without charge, by following the instructions under the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus.

 

Q:

Why am I receiving this joint proxy statement/prospectus?

 

A:

You are receiving this joint proxy statement/prospectus because Ouster, Inc., which is referred to as Ouster, and Velodyne Lidar, Inc., which is referred to as Velodyne, have agreed to combine their companies in a merger of equals structured through (i) the merger of Oban Merger Sub, Inc., a wholly-owned subsidiary of Ouster, which is referred to as Merger Sub I, with and into Velodyne, resulting in Velodyne as the surviving corporation and a wholly-owned subsidiary of Ouster, and (ii) as soon as practicable after the first merger and as the second step in a single integrated transaction with the first merger, a merger of Velodyne with and into Oban Merger Sub II LLC, a wholly-owned subsidiary of Velodyne, which is referred to as Merger Sub II, resulting in Merger Sub II as the surviving company. The Agreement and Plan of Merger, dated as of November 4, 2022 (as it may be amended from time to time), which is referred to as the merger agreement, governs the terms of the business combination and mergers of (i) Velodyne and Merger Sub I and (ii) Velodyne and Merger Sub II, which are referred to as the mergers, and is attached to this joint proxy statement/prospectus as Annex A.

In order to complete the mergers, among other things:

 

   

Ouster stockholders must approve the issuance of shares of Ouster common stock (including securities convertible into or exercisable for shares of Ouster common stock) in connection with the mergers, which is referred to as the Ouster share issuance proposal; and

 

   

Velodyne stockholders must adopt the merger agreement in accordance with the DGCL, which is referred to as the Velodyne merger agreement proposal.

Ouster is holding a special meeting of its stockholders, which is referred to as the Ouster special meeting, to obtain approval of the Ouster share issuance proposal. Ouster stockholders will also be asked to approve (i) an amendment to the Ouster charter to allow Ouster, (a) to have the option to effect, separate from and following the closing of the mergers or (b) if the merger agreement is terminated, to have the option to effect, (1) a reverse stock split of Ouster common stock at one of six reverse stock split ratios, one-for-five, one-for-six, one-for-seven, one-for-eight, one-for-nine and one-for-ten, with an exact ratio to be determined by the board of the combined company following the closing or the Ouster board, as applicable, and (2) if and when the reverse stock split is effected, a corresponding reduction in the number of authorized shares of Ouster common stock by the selected reverse stock split ratio, in the form attached to this joint proxy statement/prospectus as Annex B, which proposal is referred to as the Ouster reverse stock split proposal and (ii) the proposal to adjourn the Ouster special meeting to solicit additional proxies if there are not sufficient votes at the time of the Ouster special meeting to approve the Ouster share issuance proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Ouster stockholders, which proposal is referred to as the Ouster adjournment proposal (approval of which is not conditioned upon approval of the Ouster share issuance proposal or on completion of the mergers).

Velodyne is holding a special meeting of its stockholders, which is referred to as the Velodyne special meeting, to obtain approval of the Velodyne merger agreement proposal. Velodyne stockholders will also be

 

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asked to approve (i) on a non-binding advisory basis, the compensation that may be paid or become payable to Velodyne’s named executive officers that is based on or otherwise relates to the transactions contemplated by the merger agreement, which proposal is referred to as the Velodyne compensation proposal and (ii) the proposal to adjourn the Velodyne special meeting to solicit additional proxies if there are not sufficient votes at the time of the Velodyne special meeting to approve the Velodyne merger agreement proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Velodyne stockholders, which proposal is referred to as the Velodyne adjournment proposal.

Your vote is very important, regardless of the number of shares that you own. The approval of the Ouster share issuance proposal and the approval of the Velodyne merger agreement proposal are conditions to the obligations of Ouster and Velodyne to complete the mergers. None of the approvals of the Ouster reverse stock split proposal, the Velodyne compensation proposal, the Ouster adjournment proposal or the Velodyne adjournment proposal are conditions to the obligations of Ouster or Velodyne to complete the mergers.

 

Q:

When and where will each of the special meetings take place?

 

A:

The Ouster special meeting will be held completely virtually on the Ouster special meeting website, at www.virtualshareholdermeeting.com/OUST2023SM, on January 26, 2023 at 9 a.m., Pacific Time.

The Velodyne special meeting will be held at 5521 Hellyer Avenue, San Jose, CA 95138, on January 26, 2023 at 9 a.m., Pacific Time.

To participate in the Ouster special meeting, you will need the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials. The meeting webcast will begin promptly at 9 a.m., Pacific Time. We encourage you to access the meeting prior to the start time. Online check-in will begin at 8:45 a.m., Pacific Time, and you should allow ample time for check-in procedures. If you hold your shares through a bank or broker, instructions should also be provided on the voting instruction card provided by your bank or brokerage firm. If you lose your 16-digit control number, you may join the Ouster special meeting as a “Guest,” but you will not be able to vote, ask questions, or access the list of stockholders as of the record date.

For Velodyne stockholders, if you choose to vote your shares in person at the Velodyne special meeting, please bring required documentation in accordance with the section entitled “The Velodyne Special Meeting—Attending the Velodyne Special Meeting” of this joint proxy statement/prospectus, with respect to the Velodyne special meeting. The use of video, still photography or audio recording at the Velodyne special meeting is not permitted. For the safety of in-person attendees at the Velodyne special meeting, all bags, packages and briefcases are subject to inspection.

Even if you plan to attend or virtually attend your company’s special meeting, Ouster and Velodyne recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the applicable special meeting. With respect to the Velodyne special meeting, shares held in “street name” may be voted in person by you only if you obtain a signed legal proxy from your bank, broker or other nominee giving you the right to vote the shares.

 

Q:

Does my vote matter?

 

A:

Yes, your vote is very important, regardless of the number of shares that you own. The mergers cannot be completed unless Velodyne stockholders adopt and approve the merger agreement and Ouster stockholders approve the Ouster share issuance proposal.

For Ouster stockholders, if you do not return or submit your proxy or vote at the special meeting as provided in this joint proxy statement/prospectus, it will have no effect on the Ouster share issuance proposal or the Ouster adjournment proposal. If you are a record holder of Ouster’s common stock and do not return or submit your proxy or vote at the special meeting as provided in this joint proxy statement/prospectus, it will have the same effect as a vote “AGAINST” the Ouster reverse stock split proposal. The board of directors of Ouster, which is referred to as the Ouster board of directors, unanimously recommends that you vote “FOR” the Ouster share issuance proposal, “FOR” the Ouster reverse stock split proposal and “FOR” the Ouster adjournment proposal.

 

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For Velodyne stockholders, if you do not return or submit your proxy or vote at the special meeting as provided in this joint proxy statement/prospectus, the effect will be the same as a vote “AGAINST” the Velodyne merger agreement proposal, and will have no effect on the Velodyne compensation proposal or the Velodyne adjournment proposal. The board of directors of Velodyne, which is referred to as the Velodyne board of directors, unanimously recommends that you vote “FOR” the Velodyne merger agreement proposal, “FOR” the Velodyne compensation proposal and “FOR” the Velodyne adjournment proposal.

 

Q:

What will I receive if the mergers are completed?

 

A:

If the mergers are completed, each share of Velodyne common stock issued and outstanding immediately prior to the effective time (other than shares owned directly by Ouster, Velodyne, Merger Sub I or Merger Sub II or any wholly owned subsidiary thereof (or that are held in treasury by Velodyne)) will be converted into the right to receive 0.8204 shares of Ouster common stock, which we refer to as the exchange ratio. Each Velodyne stockholder will receive cash for any fractional shares of Ouster common stock that such stockholder would otherwise receive in the first merger. Any cash amounts to be received by a Velodyne stockholder in respect of fractional shares shall be equal to the product of (i) the aggregate proceeds from the sale by the Exchange Agent of the excess shares and (ii) a fraction, the numerator of which is the amount of the fractional share interest to which such holder of Velodyne common stock would otherwise be entitled and the denominator of which is the aggregate amount of fractional share interests to which all holders of Velodyne common stock would otherwise be entitled, without interest, subject to withholding taxes. As referred to in this joint proxy statement/prospectus, the effective time means the date and time when the certificate of merger for the first merger has been duly filed with the Secretary of State of the State of Delaware, or such other date and time as may be agreed by Ouster and Velodyne and specified in the certificate of merger for the first merger.

If the mergers are completed, Ouster stockholders’ shares of Ouster common stock will, after the effective time, constitute shares of the combined company. Because Ouster will issue a fixed number of shares of Ouster common stock in exchange for each outstanding share of Velodyne common stock, the value of the merger consideration that Velodyne stockholders will receive in the mergers will depend on the market price of shares of Ouster common stock at the effective time. The market price of shares of Ouster common stock that Velodyne stockholders receive after the mergers are completed could be greater than, less than or the same as the market price of shares of Ouster common stock on the date of this joint proxy statement/prospectus or at the time of the special meetings. Accordingly, you should obtain current market quotations for Ouster common stock and Velodyne common stock before deciding how to vote with respect to the adoption of the merger agreement. Ouster common stock is traded on the New York Stock Exchange, which is referred to as the NYSE, and Velodyne common stock is traded on the Nasdaq Global Select Market, which is referred to as the Nasdaq, under the symbols “OUST” and “VLDR,” respectively. Shares of common stock of the combined company are expected to trade on the NYSE under the symbol “OUST.”

For more information regarding the merger consideration to be received by Velodyne stockholders if the mergers are completed, see the section entitled “The Merger Agreement—Merger Consideration” of this joint proxy statement/prospectus.

 

Q:

Will Ouster equity awards be affected by the mergers?

 

A:

Ouster equity awards will remain equity awards relating to shares of Ouster common stock. Ouster equity awards will continue to vest in accordance with the terms of the award agreements applicable to such Ouster equity awards, except that the Ouster equity awards may be amended, as described in the section entitled “Interests of Ouster’s Directors and Executive Officers in the Mergers—Interests with Respect to Ouster Equity—Treatment of Ouster Equity Awards” of this joint proxy statement/prospectus. However, the mergers will be treated as a “change in control” or term of similar meaning for purposes of the Ouster compensation and benefit plans, including Ouster equity awards, which determination will result in certain “double trigger” benefits under such plans upon a qualifying termination of employment subsequent to the effective time.

 

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Q:

Will Velodyne equity awards be affected by the mergers?

 

A:

At the effective time, all Velodyne options held by individuals who are eligible to be included as an “employee” in a registration statement filed on Form S-8 immediately following the effective time (“continuing service providers”) will be converted into a stock option to purchase shares of Ouster common stock (“Ouster Option”) with the same terms and conditions as applied to the option immediately prior to the effective time; however, each Ouster Option will cover a number of shares of Ouster common stock equal to the product of the number of shares of Velodyne common stock subject to the Velodyne option and the exchange ratio and will have an exercise price per share equal to the amount obtained by dividing the per-share exercise price of the Velodyne option by the exchange ratio. Each Velodyne option that is not held by a continuing service provider will terminate immediately prior to the effective time for no consideration.

All Velodyne restricted stock unit (“RSU”) awards held by continuing service providers will be converted into an award of restricted stock units covering Ouster common stock (each, an “Ouster RSU award”) with the same terms and conditions as applied to the Velodyne RSU award immediately prior to the effective time; however, the Ouster RSU awards will cover a number of shares of Ouster common stock equal to the product of the number of shares of Velodyne common stock subject to the Velodyne RSU award and the exchange ratio. Each Velodyne RSU award that is not held by a continuing service provider will terminate immediately prior to the effective time for no consideration.

Each share of Ouster common stock issued upon conversion of a share of Velodyne common stock, as described in this paragraph, that is subject to a substantial risk of forfeiture within the meaning of Section 83 of the Code, as amended (“Velodyne Restricted Stock”) will be subject to the same substantial risk of forfeiture and will have the same terms and conditions, including vesting, as applied to the Velodyne Restricted Stock immediately prior to the effective time (“Ouster Restricted Stock”), except that any performance goals applicable to Velodyne Restricted Stock will be deemed achieved at the greater of target and actual performance and, as of the effective time, the Ouster Restricted Stock issued on conversion of Velodyne Restricted Stock that was originally scheduled to vest based on performance goals will be subject solely to the service-based vesting schedule otherwise applicable to the Velodyne Restricted Stock.

All shares of Velodyne Restricted Stock and all Velodyne RSU awards held by non-employee members of the Velodyne board of directors will vest in full and become free of any restrictions, including any risk of forfeiture, as of the effective time and will be treated as shares of Velodyne common stock under the merger agreement.

At the effective time, each of the public warrants and private warrants of Velodyne (“Velodyne Warrants”) will be converted into a warrant to acquire Ouster common stock (“Ouster Warrant”) with the same terms and conditions as applied to such Velodyne Warrant immediately prior to the effective time; however, such Ouster Warrant will cover a number of shares of Ouster common stock equal to the product of the number of shares of Velodyne common stock subject to the Velodyne Warrant and the exchange ratio and will have an exercise price per share equal to the amount obtained by dividing the per share exercise price of the Velodyne Warrant by the exchange ratio. As of November 15, 2022, Velodyne had (i) outstanding publicly traded warrants exercisable for 4,480,425 shares of common stock at $11.50 per share; and (ii) an outstanding private warrant owned by an affiliate of Amazon Inc., exercisable for up to 39,784,213 shares of common stock at $4.16 per share, 50% of which will vest at the effective time.

The mergers will each be treated as a “change in control” or term of similar meaning for purposes of the Velodyne compensation and benefit plans, which determination will result in certain “double trigger” benefits under certain of such plans upon a qualifying termination of employment by certain executives subsequent to the effective time. For more information, see the information provided in the section entitled “Interests of Velodyne’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus.

 

Q:

What will happen to the Ouster Employee Stock Purchase Plan?

 

A:

The Ouster Employee Stock Purchase Plan will remain in effect in accordance with its terms.

 

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Q:

What will happen to the Velodyne Employee Stock Purchase Plan?

 

A:

The Velodyne 2020 Employee Stock Purchase Plan (the “Velodyne ESPP”) will operate in accordance with its terms and past practice until the payroll date occurring prior to the closing, at which time (a) any offering period under the Velodyne ESPP in effect as of payroll date occurring prior to the closing of the first merger will be shortened by setting a new “Purchase Date” (within the meaning of the Velodyne ESPP) in respect of such offering period that is no later than such payroll date (after crediting contributions for such payroll date) (which is referred to as the “offering period end date”), and on the offering period end date, cause each outstanding purchase right under the Velodyne ESPP to be exercised on that date; and (b) as of the offering period end date, the Velodyne ESPP will be suspended, and no offering periods or purchase periods will be thereafter commenced and no payroll deductions or other contributions will be thereafter made or effected with respect to the Velodyne ESPP.

 

Q:

How does the board of directors of Ouster recommend that I vote at the Ouster special meeting?

 

A:

The Ouster board of directors unanimously recommends that you vote “FOR” the Ouster share issuance proposal, “FOR” the Ouster reverse stock split proposal and “FOR” the Ouster adjournment proposal.

In considering the recommendations of the Ouster board of directors, Ouster stockholders should be aware that Ouster directors and executive officers have interests in the mergers that are different from, or in addition to, their interests as Ouster stockholders. These interests may include, among others, the payment of severance benefits and acceleration of outstanding Ouster equity awards upon a qualifying termination of employment. For a more complete description of these interests, see the information provided in the section entitled “Interests of Ouster’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus.

 

Q:

How does the board of directors of Velodyne recommend that I vote at the Velodyne special meeting?

 

A:

The Velodyne board of directors unanimously recommends that you vote “FOR” the Velodyne merger agreement proposal, “FOR” the Velodyne compensation proposal and “FOR” the Velodyne adjournment proposal.

In considering the recommendations of the Velodyne board of directors, Velodyne stockholders should be aware that Velodyne directors and executive officers have interests in the mergers that are different from, or in addition to, their interests as Velodyne stockholders. These interests may include, among others, the payment of severance benefits, including the acceleration of outstanding Velodyne equity awards upon certain qualifying terminations of employment in connection with the mergers. For a more complete description of these interests, see the information provided in the section entitled “Interests of Velodyne’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus.

 

Q:

Who is entitled to vote at the Ouster special meeting?

 

A:

The record date for the Ouster special meeting is December 13, 2022, which is referred to as the Ouster record date. All holders of shares of Ouster common stock who held shares at the close of business on the Ouster record date are entitled to receive notice of, and to vote at, the Ouster special meeting and all adjournments thereof (if any). Each such holder of Ouster common stock is entitled to cast one vote on each matter properly brought before the Ouster special meeting for each share of Ouster common stock that such holder owned of record as of the Ouster record date. Virtual attendance at the special meeting is not required to vote. See below and the section entitled “The Ouster Special Meeting—Methods of Voting” of this joint proxy statement/prospectus for instructions on how to vote your shares without attending the Ouster special meeting.

 

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Q:

Who is entitled to vote at the Velodyne special meeting?

 

A:

The record date for the Velodyne special meeting is December 5, 2022, which is referred to as the Velodyne record date. All holders of shares of Velodyne common stock who held shares at the close of business on the Velodyne record date are entitled to receive notice of, and to vote at, the Velodyne special meeting and all adjournments thereof (if any). Each such holder of Velodyne common stock is entitled to cast one vote on each matter properly brought before the Velodyne special meeting for each share of Velodyne common stock that such holder owned of record as of the Velodyne record date. Physical attendance at the special meeting is not required to vote. See below and the section entitled “The Velodyne Special Meeting—Methods of Voting” of this joint proxy statement/prospectus for instructions on how to vote your shares without attending the Velodyne special meeting.

 

Q:

What is a proxy?

 

A:

A stockholder’s legal designation of another person to vote such stockholder’s shares of common stock at a special meeting is referred to as a proxy. The document used to designate a proxy to vote your shares of Ouster common stock or Velodyne common stock, as applicable, is referred to as a proxy card.

 

Q:

How many votes do I have for the Ouster special meeting?

 

A:

Each Ouster stockholder is entitled to one vote for each share of Ouster common stock held of record as of the close of business on the Ouster record date on each proposal presented at the Ouster special meeting. As of the close of business on November 30, 2022, there were 184,952,952 outstanding shares of Ouster common stock.

 

Q:

How many votes do I have for the Velodyne special meeting?

 

A:

Each Velodyne stockholder is entitled to one vote for each share of Velodyne common stock held of record as of the close of business on the Velodyne record date on each proposal presented at the Velodyne special meeting. As of the close of business on the Velodyne record date, there were 238,281,867 outstanding shares of Velodyne common stock.

 

Q:

What constitutes a quorum for the Ouster special meeting?

 

A:

The holders of a majority in voting power of the shares of Ouster common stock issued and outstanding and entitled to vote at the Ouster special meeting must be represented at the Ouster special meeting virtually via the Ouster special meeting website, by remote communication or by proxy in order to constitute a quorum.

 

Q:

What constitutes a quorum for the Velodyne special meeting?

 

A:

The holders of a majority in voting power of the shares of the capital stock of Velodyne issued and outstanding and entitled to vote at the Velodyne special meeting must be represented at the Velodyne special meeting in person, by means of remote communication in a manner, if any, authorized by the Velodyne board of directors in its sole discretion, or by proxy in order to constitute a quorum.

 

Q:

Where will the common stock of the combined company that I receive in the mergers be publicly traded?

 

A:

Ouster will use its reasonable best efforts to cause the shares of Ouster common stock (including securities convertible into or exercisable for shares of Ouster common stock, such as warrants) to be issued in the mergers to be listed on the NYSE.

 

Q:

What happens if the mergers are not completed?

 

A:

If the merger agreement is not adopted by Velodyne stockholders or if the mergers are not completed for any other reason, Velodyne stockholders will not receive any merger consideration for their shares of Velodyne common stock in connection with the first merger. Instead, Velodyne will remain an independent

 

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public company and Velodyne common stock will continue to be listed and traded on the Nasdaq, and Ouster common stock will continue to be traded on the NYSE, and Ouster will not complete the share issuance pursuant to the merger agreement as contemplated by the Ouster share issuance proposal. However, if the Ouster reverse stock split proposal is approved, even if the other proposals are not approved, Ouster may amend its charter in accordance with the Ouster reverse stock split proposal. If the merger agreement is terminated under specified circumstances, either Ouster or Velodyne may be required to pay or cause to be paid to the other party a termination fee of $7,000,000. See the section entitled “The Merger Agreement—Termination Fees” of this joint proxy statement/prospectus for a more detailed discussion of the termination fees.

 

Q:

What is a “broker non-vote”?

 

A:

Under the NYSE rules, banks, brokers and other nominees may use their discretion to vote “uninstructed” shares (i.e., shares of record held by banks, brokers or other nominees, but with respect to which the beneficial owner of such shares has not provided instructions on how to vote on a particular proposal) with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Other than the Ouster reverse stock split proposal, all of the proposals currently scheduled for consideration at the Ouster special meeting and the Velodyne special meeting are “non-routine” matters. These NYSE rules are applicable to the votes to be held at the Velodyne special meeting even though the Velodyne common stock is currently listed on the Nasdaq.

A “broker non-vote” occurs on an item when (a) a bank, broker or other nominee has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other proposals without instructions from the beneficial owner of the shares and (b) the beneficial owner fails to provide the bank, broker or other nominee with such instructions. None of the proposals currently scheduled to be voted on at either the Ouster special meeting or the Velodyne special meeting are routine matters for which brokers may have discretionary authority to vote, except for the Ouster reverse stock split proposal, which is considered routine and brokers therefore have discretionary authority to vote.

 

Q:

What stockholder vote is required for the approval of each proposal at the Ouster special meeting? What will happen if I fail to vote or abstain from voting on each proposal at the Ouster special meeting?

 

A:

Ouster Proposal # 1: Ouster Share Issuance Proposal. Assuming a quorum is present at the Ouster special meeting, the approval of the share issuance by Ouster stockholders requires the affirmative vote of the holders of a majority in voting power of the votes cast at the Ouster special meeting on the Ouster share issuance proposal. Accordingly, an Ouster stockholder’s abstention from voting, a broker non-vote or the failure of an Ouster stockholder not present at the meeting to vote will have no effect on the Ouster share issuance proposal.

Ouster Proposal # 2: Ouster Reverse Stock Split Proposal. Assuming a quorum is present at the Ouster special meeting, the approval and adoption of the amendment to the Ouster charter to allow Ouster, (a) to have the option to effect, separate from and following the closing of the mergers or (b) if the merger agreement is terminated, to have the option to effect, (i) a reverse stock split of Ouster common stock at one of six reverse stock split ratios, one-for-five, one-for-six, one-for-seven, one-for-eight, one-for-nine and one-for-ten, with an exact ratio to be determined by the board of the combined company following the closing or the Ouster board, as applicable, and (ii) if and when the reverse stock split is effected, a corresponding reduction in the number of authorized shares of Ouster common stock by the selected reverse stock split ratio, requires the affirmative vote of the holders of a majority of the outstanding shares of Ouster common stock entitled to vote at the Ouster special meeting on the Ouster reverse stock split proposal. Accordingly, an Ouster stockholder’s abstention from voting or the failure of an Ouster stockholder not present at the meeting to vote will have the same effect as a vote “AGAINST” the Ouster reverse stock split proposal. We do not anticipate any broker non-votes in connection with this proposal. Approval of the

 

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Ouster reverse stock split proposal is not conditioned upon approval of the Ouster share issuance proposal or on completion of the mergers. As a result, if the Ouster stockholders vote to approve the Ouster reverse stock split proposal, and if the merger agreement is terminated, the Ouster board of directors, in its discretion, may elect to effect the reverse stock split.

Ouster Proposal # 3: Ouster Adjournment Proposal. The Ouster special meeting may be adjourned to solicit additional proxies if there are not sufficient votes at the time of the Ouster special meeting to approve the Ouster share issuance proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Ouster stockholders. If a quorum is present, the affirmative vote of the holders of a majority in voting power of the votes cast at the Ouster special meeting on the Ouster adjournment proposal is required to adjourn the Ouster special meeting. Accordingly, in such case, an Ouster stockholder’s abstention from voting, a broker non-vote or the failure of an Ouster stockholder not present at the meeting to vote will have no effect on the Ouster adjournment proposal. If a quorum is not present, then either (i) the person presiding over the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, or represented by proxy, shall have power to adjourn the Ouster special meeting. Accordingly, in the case of (ii), an Ouster stockholder’s abstention from voting, a broker non-vote or the failure of an Ouster stockholder not present at the meeting to vote will have the same effect as a vote “AGAINST” the Ouster adjournment proposal.

 

Q:

Why am I being asked to approve the Ouster reverse stock split proposal?

 

A:

The Ouster board of directors approved the proposal to amend the Ouster charter to allow Ouster to have the option to effect, separate from and following the closing of the mergers, (a) a reverse stock split of Ouster common stock at one of six reverse stock split ratios, one-for-five, one-for-six, one-for-seven, one-for-eight, one-for-nine and one-for-ten, with an exact ratio to be determined by the board of the combined company following the closing, and (b) if and when the reverse stock split is effected, a corresponding reduction in the number of authorized shares of Ouster common stock by the selected reverse stock split ratio. The Ouster board of directors approved the Ouster reverse stock split proposal for the following reasons:

 

   

the Ouster board of directors believes a higher stock price that may result from the reverse stock split may help generate investor interest in Ouster and help Ouster attract and retain employees;

 

   

if the reverse stock split successfully increases the per share price of Ouster common stock, the Ouster board of directors believes such increase may increase trading volume in Ouster common stock; and

 

   

if the reverse stock split successfully increases the per share price of Ouster common stock, the Ouster board of directors believes that effecting the reverse stock split may be an effective means of avoiding any potential delisting of Ouster common stock from the NYSE.

The Ouster reverse stock split proposal, if approved by Ouster stockholders, will provide the board of the combined company with the flexibility, but not the obligation, to effect a reverse stock split, separate from and following the closing of the mergers and the transactions contemplated by the merger agreement. If the mergers are not consummated for any reason, the Ouster board of directors may still elect to effect a reverse stock split. Even if the Ouster reverse stock split proposal is approved by Ouster stockholders, the board of the combined company may delay or abandon the reverse stock split at any time prior to the effective time of the reverse stock split if the board of the combined company determines that the reverse stock split is no longer in the best interests of the combined company or its stockholders. For further details, see the section titled “Ouster Proposal #2: Ouster Reverse Stock Split Proposal.”

 

Q:

What stockholder vote is required for the approval of each proposal at the Velodyne special meeting? What will happen if I fail to vote or abstain from voting on each proposal at the Velodyne special meeting?

 

A:

Velodyne Proposal #1: Velodyne Merger Agreement Proposal. Assuming a quorum is present at the Velodyne special meeting, the approval of the merger agreement proposal by Velodyne stockholders

 

requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Velodyne

 

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common stock entitled to vote at the Velodyne special meeting on the Velodyne merger agreement proposal. Accordingly, a Velodyne stockholder’s abstention from voting, a broker non-vote or the failure of a Velodyne stockholder not present at the meeting to vote (including the failure of a Velodyne stockholder who holds shares in “street name” through a bank, broker or other nominee to give voting instructions to that bank, broker or other nominee) will have the same effect as votes cast “AGAINST” the Velodyne merger agreement proposal.

Velodyne Proposal #2: Velodyne Compensation Proposal. Assuming a quorum is present at the Velodyne special meeting, the approval, on a non-binding advisory basis, of the compensation that may be paid or become payable to Velodyne’s named executive officers that is based on or otherwise relates to the transactions contemplated by the merger agreement, requires the affirmative vote of the holders of a majority of the votes cast at the Velodyne special meeting on the Velodyne compensation proposal. Accordingly, a Velodyne stockholder’s abstention from voting, a broker non-vote or the failure of a Velodyne stockholder not present at the meeting to vote (including the failure of a Velodyne stockholder who holds shares in “street name” through a bank, broker or other nominee to give voting instructions to that bank, broker or other nominee) will have no effect on the Velodyne compensation proposal.

Velodyne Proposal #3: Velodyne Adjournment Proposal. The Velodyne special meeting may be adjourned to solicit additional proxies if there are not sufficient votes at the time of the Velodyne special meeting to approve the Velodyne merger agreement proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Velodyne stockholders. Whether or not a quorum is present, the affirmative vote of the holders of a majority of the votes cast at the Velodyne special meeting on the Velodyne adjournment proposal is required to approve the Velodyne adjournment proposal, and the chairman of the Velodyne special meeting also has the power to adjourn such Velodyne special meeting from time to time. Accordingly, a Velodyne stockholder’s abstention from voting, a broker non-vote or the failure of a Velodyne stockholder not present at the meeting to vote (including the failure of a Velodyne stockholder who holds shares in “street name” through a bank, broker or other nominee to give voting instructions to that bank, broker or other nominee) will have no effect on the Velodyne adjournment proposal.

 

Q:

Why am I being asked to consider and vote on, by non-binding, advisory vote, the Velodyne compensation proposal?

 

A:

Under SEC rules, Velodyne is required to seek a non-binding advisory vote of its stockholders relating to the compensation that may be paid or become payable to Velodyne’s named executive officers that is based on or otherwise relates to the mergers (also known as “golden parachute” compensation).

 

Q:

What happens if Velodyne stockholders do not approve, by non-binding, advisory vote, the Velodyne compensation proposal?

 

A:

Because the vote on the proposal to approve the Velodyne compensation proposal is advisory in nature, the outcome of the vote will not be binding upon Velodyne or the combined company. Accordingly, the merger-related compensation, which is described under “Interests of Velodyne’s Directors and Executive Officers in the Mergers,” may be paid to Velodyne’s named executive officers even if Velodyne stockholders do not approve the Velodyne compensation proposal.

 

Q:

What if I hold shares in both Ouster and Velodyne?

 

A:

If you are both an Ouster stockholder and a Velodyne stockholder, you will receive two separate packages of proxy materials. A vote cast as an Ouster stockholder will not count as a vote cast as a Velodyne stockholder, and a vote cast as a Velodyne stockholder will not count as a vote cast as an Ouster stockholder. Therefore, please submit separate proxies for your shares of Ouster common stock and your shares of Velodyne common stock.

 

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Q:

How can I vote my shares in person at my respective special meeting?

 

A:

Record Holders. Shares held directly in your name as the stockholder of record of Ouster or Velodyne may be voted electronically at the Ouster special meeting or in person at the Velodyne special meeting, as applicable. If you choose to vote your shares electronically at the Ouster special meeting or in person at the Velodyne special meeting, as applicable, please bring required documentation in accordance with the section entitled “The Ouster Special Meeting—Attending the Ouster Special Meeting” of this joint proxy statement/prospectus, with respect to the Ouster special meeting, and the section entitled “The Velodyne Special Meeting—Attending the Velodyne Special Meeting” of this joint proxy statement/prospectus, with respect to the Velodyne special meeting.

Shares in “street name.” With respect to the Velodyne special meeting, shares held in “street name” may be voted in person by you only if you obtain a signed legal proxy from your bank, broker or other nominee giving you the right to vote the shares and bring the signed legal proxy to the meeting. If you choose to vote your shares in person at the Velodyne special meeting, please bring required documentation in accordance with the section entitled “The Velodyne Special Meeting—Attending the Velodyne Special Meeting” of this joint proxy statement/prospectus.

With respect to the Ouster special meeting, if your shares are held in street name through a bank, broker or other nominee, you will receive instructions on how to vote from the bank or broker. You must follow their instructions in order for your shares to be voted. Internet and telephone voting also may be offered to stockholders owning shares through certain banks and brokers. If your shares are not registered in your own name and you would like to vote your shares at the Ouster special meeting, you may visit www.virtualshareholdermeeting.com/OUST2023SM and enter the 16-digit control number included in the voting instruction card provided to you by your bank or brokerage firm. If you hold your shares in street name and you do not receive a 16-digit control number, you may need to log in to your bank or brokerage firm’s website and select the shareholder communications mailbox to access the meeting and vote. Instructions should also be provided on the voting instruction card provided by your bank or brokerage firm.

Even if you plan to attend the Ouster special meeting electronically or the Velodyne special meeting in person, as applicable, Ouster and Velodyne recommend that you submit a proxy to vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the respective special meeting. The use of video, still photography or audio recording is not permitted at either the Ouster special meeting or the Velodyne special meeting and, for the safety of in-person attendees at the Velodyne special meeting, all bags, packages and briefcases are subject to inspection.

Additional information on attending the special meetings can be found in the section entitled “The Ouster Special Meeting” of this joint proxy statement/prospectus and in the section entitled “The Velodyne Special Meeting” of this joint proxy statement/prospectus.

 

Q:

What if during the check-in time or during the Ouster special meeting I have technical difficulties or trouble accessing the virtual meeting website?

 

A:

We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website for the Ouster special meeting. If you encounter any difficulties accessing the virtual meeting website during the check-in or meeting time for the Ouster special meeting, please call the technical support number found on the Ouster special meeting website.

 

Q:

How can I vote my shares without attending my respective special meeting?

 

A:

Whether you hold your shares directly as the stockholder of record of Ouster or Velodyne or beneficially in “street name,” you may direct your vote by proxy without attending the Ouster special meeting or the Velodyne special meeting, as applicable. You can vote by proxy over the Internet, by telephone or by mail by following the instructions provided in the enclosed proxy card. Please note that if you hold shares beneficially in “street name,” you should follow the voting instructions provided by your bank, broker or other nominee.

 

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Additional information on voting procedures can be found under the section entitled “The Ouster Special Meeting” of this joint proxy statement/prospectus and under the section entitled “The Velodyne Special Meeting” of this joint proxy statement/prospectus.

 

Q:

What is the difference between holding shares as a stockholder of record and as a beneficial owner of shares held in “street name?”

 

A:

If your shares of common stock of Ouster or Velodyne are registered directly in your name with Continental Stock Transfer & Trust Company, N.A., Ouster’s and Velodyne’s transfer agent, you are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to vote, or to grant a proxy for your vote, directly to Ouster or Velodyne, as applicable, or to a third party to vote, at the respective special meeting.

If your shares of common stock in Ouster or Velodyne are held by a bank, broker or other nominee, you are considered the beneficial owner of shares held in “street name,” and your bank, broker or other nominee is considered the stockholder of record with respect to those shares. Your bank, broker or other nominee will provide you, as the beneficial owner, a package describing the procedure for voting your shares. You should follow the instructions provided by them to vote your shares. You are invited to attend the Ouster special meeting or the Velodyne special meeting, as applicable; however, you may not vote these shares in person at the Velodyne special meeting unless you obtain a signed legal proxy, executed in your favor, from your bank, broker or other nominee that holds your shares, giving you the right to vote the shares in person at the Velodyne special meeting. With respect to the Ouster special meeting, if your shares are not registered in your own name and you would like to vote your shares at the Ouster special meeting, you may visit www.virtualshareholdermeeting.com/OUST2023SM and enter the 16-digit control number included in the voting instruction card provided to you by your bank or brokerage firm. If you hold your shares in street name and you do not receive a 16-digit control number, you may need to log in to your bank or brokerage firm’s website and select the shareholder communications mailbox to access the meeting and vote. Instructions should also be provided on the voting instruction card provided by your bank or brokerage firm.

 

Q:

If my shares of Ouster common stock or Velodyne common stock are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote those shares for me?

 

A:

In most cases, no. For all proposals except the Ouster reverse stock split proposal, your bank, broker or other nominee will only be permitted to vote your shares of Ouster common stock or Velodyne common stock, as applicable, if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee regarding the voting of your shares. Under the rules of the NYSE and Nasdaq, banks, brokers and other nominees who hold shares of Ouster common stock or Velodyne common stock in “street name” for their customers have authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers and other nominees are prohibited from exercising their voting discretion with respect to non-routine matters. The Ouster reverse stock split proposal is considered a routine matter and all other proposals currently scheduled to be considered and voted on at each of the Ouster special meeting and the Velodyne special meeting are considered non-routine. As a result, for proposals other than the Ouster reverse stock split proposal, absent specific instructions from the beneficial owner of such shares, banks, brokers and other nominees are not empowered to vote such shares.

For Ouster stockholders, not instructing your bank, broker or other nominee how you wish to vote your shares will have no effect on the Ouster share issuance proposal or, assuming a quorum is present at the Ouster special meeting, the Ouster adjournment proposal. We do not expect any broker non-votes with respect to the Ouster reverse stock split proposal.

For Velodyne stockholders, not instructing your bank, broker or other nominee how you wish to vote your shares will have the same effect as a vote “AGAINST” the Velodyne merger agreement proposal, but will not

 

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be counted as “FOR” or “AGAINST” and, assuming a quorum is present at the Velodyne special meeting, will have no effect on, the Velodyne compensation proposal or the Velodyne adjournment proposal.

 

Q:

What should I do if I receive more than one set of voting materials for the same special meeting?

 

A:

If you hold shares of Ouster common stock or Velodyne common stock in “street name” and also directly in your name as a stockholder of record or otherwise, or if you hold shares of Ouster common stock or Velodyne common stock in more than one brokerage account, you may receive more than one set of voting materials relating to the same special meeting.

Record Holders. For shares held directly, please complete, sign, date and return each proxy card (or submit a proxy to cast your vote over the Internet, or by telephone, as provided on each proxy card) or otherwise follow the voting instructions provided in this joint proxy statement/prospectus in order to ensure that all of your shares of Ouster common stock or Velodyne common stock are voted.

Shares in “street name.” For shares held in “street name” through a bank, broker or other nominee, you should follow the procedures provided by your bank, broker or other nominee to vote your shares.

 

Q:

If a stockholder gives a proxy, how are the shares of Ouster common stock or Velodyne common stock voted?

 

A:

Regardless of the method by which you choose to vote, the individuals named on the enclosed proxy card will vote your shares of Ouster common stock or Velodyne common stock, as applicable, in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of Ouster common stock or Velodyne common stock, as applicable, should be voted for or against, or abstain from voting on, all, some or none of the specific items of business to come before the respective special meetings.

 

Q:

How will my shares of Ouster common stock be voted if I return a blank proxy?

 

A:

If you are a stockholder of record and you sign, date and return your proxy and do not indicate how you want your shares of Ouster common stock to be voted, then your shares of Ouster common stock will be voted “FOR” the Ouster share issuance proposal, “FOR” the Ouster reverse stock split proposal and “FOR” the Ouster adjournment proposal.

 

Q:

How will my shares of Velodyne common stock be voted if I return a blank proxy?

 

A:

If you are a stockholder of record and you sign, date and return your proxy and do not indicate how you want your shares of Velodyne common stock to be voted, then your shares of Velodyne common stock will be voted “FOR” the Velodyne merger agreement proposal, “FOR” the Velodyne compensation proposal and “FOR” the Velodyne adjournment proposal.

 

Q:

Can I change my vote after I have submitted my proxy?

 

A:

Any Ouster or Velodyne stockholder giving a proxy has the right to revoke it before the proxy is voted at the applicable special meeting by doing any of the following:

 

   

subsequently submitting a new proxy (including by submitting a proxy via the Internet or telephone) that is received prior to the applicable special meeting (which should be received by the deadline specified on the accompanying proxy card in order to ensure that your proxy is counted);

 

   

giving written notice of your revocation to Ouster’s corporate secretary or Velodyne’s corporate secretary, as applicable; or

 

   

voting virtually at the Ouster special meeting via the Ouster special meeting website, or voting in person at the Velodyne special meeting, as applicable.

 

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Execution or revocation of a proxy will not in any way affect your right to attend the applicable special meeting and vote electronically at the Ouster special meeting or in person at the Velodyne special meeting, as applicable. Attending the applicable special meeting will not, by itself, revoke a proxy. Written notices of revocation and other communications with respect to the revocation of proxies should be addressed:

 

if you are an Ouster stockholder, to:

Ouster, Inc.

350 Treat Avenue

San Francisco, California 94110

(415) 949-0108

Attention: Corporate Secretary

  

if you are a Velodyne stockholder, to:

Velodyne Lidar, Inc.

5521 Hellyer Avenue

San Jose, California 95138

(669) 275-2251

Attention: Corporate Secretary

For more information, see the section entitled “The Ouster Special Meeting—Revocability of Proxies” of this joint proxy statement/prospectus and the section entitled “The Velodyne Special Meeting—Revocability of Proxies” of this joint proxy statement/prospectus, as applicable.

 

Q:

If I hold my shares in “street name,” can I change my voting instructions after I have submitted voting instructions to my bank, broker or other nominee?

 

A:

If your shares are held in the name of a bank, broker or other nominee and you previously provided voting instructions to your bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee to revoke or change your voting instructions.

 

Q:

Where can I find the voting results of the special meetings?

 

A:

The preliminary voting results for each special meeting will be announced at that special meeting. In addition, within four business days after completion of its special meeting, each of Ouster and Velodyne intends to file the final voting results of its respective special meeting with the SEC on a Current Report on Form 8-K.

 

Q:

If I do not favor the mergers, what are my rights?

 

A:

Neither Ouster stockholders nor Velodyne stockholders are entitled to appraisal rights under the DGCL. If they are not in favor of the mergers, Ouster stockholders may vote against the Ouster share issuance proposal and Velodyne stockholders may vote against the Velodyne merger agreement proposal. For more information, see the section entitled “No Appraisal Rights” of this joint proxy statement/prospectus. Information about how Ouster stockholders may vote on the proposals being considered in connection with the mergers can be found under the section entitled “The Ouster Special Meeting” of this joint proxy statement/prospectus. Information about how Velodyne stockholders may vote on the proposals being considered in connection with the mergers can be found under the section entitled “The Velodyne Special Meeting” of this joint proxy statement/prospectus.

 

Q:

Are there any risks that I should consider in deciding whether to vote for the approval of the Ouster share issuance proposal or the approval of the Velodyne merger agreement proposal?

 

A:

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” of this joint proxy statement/prospectus. You also should read and carefully consider the risk factors of Ouster and Velodyne contained in the documents that are incorporated by reference into this joint proxy statement/prospectus.

 

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Q:

Who will solicit and pay the cost of soliciting proxies?

 

A:

Ouster has engaged MacKenzie Partners, Inc., which is referred to as MacKenzie Partners, to assist in the solicitation of proxies for the Ouster special meeting. Ouster estimates that it will pay MacKenzie Partners a fee of approximately $10,000, plus reimbursement of reasonable expenses. Ouster has agreed to indemnify MacKenzie Partners against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions). Velodyne has engaged Kingsdale Advisors, which is referred to as Kingsdale, to assist in the solicitation of proxies for the Velodyne special meeting and to provide related advice and informational support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $15,000 in total. Velodyne has agreed to indemnify Kingsdale against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions). Ouster and Velodyne also may be required to reimburse banks, brokers and other custodians, nominees and fiduciaries or their respective agents for their expenses in forwarding proxy materials to beneficial owners of Ouster common stock and Velodyne common stock, respectively. Ouster’s directors, officers and employees and Velodyne’s directors, officers and employees also may solicit proxies, by telephone, by mail, by electronic means or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q:

What are the U.S. federal income tax consequences of the mergers to Velodyne stockholders?

 

A:

The mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, as amended, which is referred to as the Code. Assuming that the mergers, taken together, so qualify, a U.S. holder (as defined in the section entitled “U.S. Federal Income Tax Consequences of the Mergers” of this joint proxy statement/prospectus) of Velodyne common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of Velodyne common stock for Ouster common stock in the mergers, except with respect to cash received by such holder in lieu of fractional shares of Ouster common stock.

See the section entitled “U.S. Federal Income Tax Consequences of the Mergers” of this joint proxy statement/prospectus for a more complete description of certain U.S. federal income tax consequences of the mergers. Please consult your tax advisors as to the specific tax consequences to you of the mergers.

 

Q:

When are the mergers expected to be completed?

 

A:

Subject to the satisfaction or waiver of the closing conditions described under the section entitled “The Merger Agreement—Conditions to the Completion of the Mergers” of this joint proxy statement/prospectus, including the adoption of the merger agreement by Velodyne stockholders and the approval of the Ouster stock issuance proposal by Ouster stockholders, the mergers are expected to close in the first half of 2023. However, neither Ouster nor Velodyne can predict the actual date on which the mergers will be completed, or if the mergers will be completed at all, because completion of the mergers are subject to conditions and factors outside the control of both companies.

 

Q:

What are the conditions to the completion of the mergers?

 

A:

The mergers are subject to a number of conditions to closing as specified in the merger agreement. These closing conditions include, among others, (i) approval by the stockholders of Ouster of the issuance of the shares of Ouster common stock, (ii) the adoption by the stockholders of Velodyne of the merger agreement, (iii) authorization for listing on the NYSE of the shares of Ouster common stock to be issued in the mergers, subject to official notice of issuance, (iv) effectiveness of this registration statement on Form S-4, (v) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Act, if applicable, and (vi) the absence of any law or order promulgated, entered, enforced, enacted or issued by a governmental authority which prohibits, restrains, or makes illegal the consummation of the mergers and shall continue in effect. The obligation of each of Ouster and Velodyne to consummate the mergers is also conditioned on, among other things, (1) the representations and warranties of the other party being true and

 

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correct as of the date of the merger agreement and as of the closing date of the mergers, subject to certain materiality exceptions, (2) the performance in all material respects by the other party of its obligations under the merger agreement required to be performed on or prior to the date of the closing of the mergers, (3) the receipt of certain opinions from legal counsel regarding the intended tax treatment of the mergers and (4) the absence of a continuing material adverse effect with respect to the other party. No assurance can be given that the required consents and approvals will be obtained or that the required conditions to closing will be satisfied, and, even if all required consents and approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions and timing of such consents and approvals. Any delay in completing the mergers could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that Ouster and Velodyne expect to achieve if the mergers are successfully completed within the expected time frame. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the mergers, see the sections entitled “The Merger Agreement—Conditions to the Completion of the Mergers” and “The Mergers—Regulatory Approvals” of this joint proxy statement/prospectus.

 

Q:

What respective equity stakes will Ouster stockholders and Velodyne stockholders hold in the combined company immediately following the mergers?

 

A:

As of the date of this joint proxy statement/prospectus, based on the exchange ratio of 0.8204 and the estimated number of shares of common stock of Ouster and Velodyne that will be outstanding immediately prior to the completion of the first merger including equity awards, Ouster and Velodyne estimate that holders of shares of Ouster common stock as of immediately prior to the completion of the first merger will hold, in the aggregate, approximately 50% of the issued and outstanding shares of common stock of the combined company (based on fully diluted shares outstanding of the combined company including equity awards (using the treasury stock method)) immediately following the completion of the first merger, and holders of shares of Velodyne common stock as of immediately prior to the completion of the first merger will hold, in the aggregate, approximately 50% of the issued and outstanding shares of common stock of the combined company (based on fully diluted shares outstanding of the combined company including equity awards (using the treasury stock method)) immediately following the completion of the first merger. The exact equity stake of Ouster stockholders and Velodyne stockholders in the combined company immediately following the first merger will depend on the number of shares of Ouster common stock and Velodyne common stock issued and outstanding immediately prior to the first merger.

 

Q:

What should I do now?

 

A:

You should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, and return your completed, signed and dated proxy card(s) by mail in the enclosed postage-paid envelope(s) or submit your voting instructions over the Internet, or by telephone, as soon as possible so that your shares will be voted in accordance with your instructions.

 

Q:

Whom do I call if I have questions about the Ouster special meeting, the Velodyne special meeting or the mergers?

 

A:

If you have questions about the Ouster special meeting, the Velodyne special meeting or the mergers, or desire additional copies of this joint proxy statement/prospectus or additional proxies, you may contact:

 

if you are an Ouster stockholder:

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor

New York, NY 10018

(212) 929-5500 (Call Collect)

Call Toll-Free: (800) 322-2885

proxy@mackenziepartners.com

  

if you are a Velodyne stockholder:

Kingsdale Advisors

745 Fifth Avenue, 5th Floor

New York, New York 10151

(646)-851-2790 (Call Collect)

Call Toll Free: (877)-659-1821

contactus@kingsdaleadvisors.com

 

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SUMMARY

For your convenience, provided below is a brief summary of certain information contained in this joint proxy statement/prospectus. This summary highlights selected information from this joint proxy statement/prospectus and does not contain all of the information that may be important to you as an Ouster stockholder or a Velodyne stockholder. To understand the mergers fully and for a more complete description of the terms of the mergers, you should read carefully this entire joint proxy statement/prospectus, its annexes and the other documents to which you are referred. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions under the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus.

The Parties to the Mergers

Ouster, Inc.

Ouster is a leading provider of high-resolution digital lidar sensors that offer advanced 3D vision to machinery, vehicles, robots, and fixed infrastructure assets, allowing each to understand and visualize the surrounding world and ultimately enabling safe operation and ubiquitous autonomy. Ouster’s principal executive office is located at 350 Treat Avenue, San Francisco, CA 94110. Its telephone number is (415) 949-0108.

Velodyne Lidar, Inc.

Velodyne ushered in a new era of autonomous technology with the invention of real-time surround view lidar sensors. Velodyne’s revolutionary sensor and software solutions provide flexibility, quality and performance to meet the needs of a wide range of industries, including robotics, industrial, intelligent infrastructure, autonomous vehicles and advanced driver assistance systems (ADAS). Through continuous innovation, Velodyne strives to transform lives and communities by advancing safer mobility for all. Velodyne’s principal executive offices are located at 5521 Hellyer Avenue, San Jose, California 95138 and its telephone number is (669) 275-2251.

Oban Merger Sub, Inc.

Merger Sub I, a newly formed, direct, wholly-owned subsidiary of Ouster, is a Delaware corporation that was formed on November 1, 2022, for the sole purpose of effecting the mergers. Merger Sub I has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement.

Oban Merger Sub II LLC

Merger Sub II, a newly formed, direct, wholly-owned subsidiary of Ouster, is a Delaware limited liability company that was formed on November 1, 2022, for the sole purpose of effecting the mergers. Merger Sub II has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement.

The Mergers and the Merger Agreement

The terms and conditions of the mergers are contained in the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus. You are encouraged to read the merger agreement carefully and in its entirety, as it is the primary legal document that governs the mergers.

Pursuant to the terms of the merger agreement, Merger Sub I will merge with and into Velodyne, which transaction is referred to as the first merger, with Velodyne as the surviving corporation in the first merger and as

 

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soon as practicable after the first merger and as the second step in a single integrated transaction with the first merger, Velodyne will merge with and into Merger Sub II, which transaction is referred to as the second merger, with Merger Sub II as the surviving company and a direct, wholly-owned subsidiary of Ouster. The first merger and the second merger together are referred to as the mergers.

Following the mergers, Velodyne common stock will be delisted from the Nasdaq, deregistered under the Exchange Act and will cease to be publicly traded.

Exchange Ratio

At the effective time, by virtue of the first merger and without any further action on the part of the parties, holders of any securities of Velodyne, Merger Sub I, Merger Sub II or of any other person, each share of Velodyne common stock that is issued and outstanding immediately prior to the effective time (other than shares of Velodyne common stock owned by Velodyne, Ouster, Merger Sub I or Merger Sub II) will be automatically converted into and become exchangeable for 0.8204 shares of Ouster common stock, which we refer to as the exchange ratio, and cash in lieu of any fractional shares of Ouster common stock any former holder of Velodyne common stock would otherwise be entitled to receive.

The exchange ratio is fixed, which means that it will not change between now and the date of the mergers, regardless of whether the market price of either Ouster common stock or Velodyne common stock changes. Therefore, the value of the merger consideration will depend on the market price of Ouster common stock at the effective time. The market price of Ouster common stock has fluctuated since the date of the announcement of the merger agreement and may continue to fluctuate from the date of this joint proxy statement/prospectus to the date of the special meetings, the date the mergers are completed and thereafter. The market price of Ouster common stock, when received by Velodyne stockholders after the mergers are completed, could be greater than, less than or the same as the market price of Ouster common stock on the date of this joint proxy statement/prospectus or at the times of the respective special meetings. Accordingly, you should obtain current market quotations for Ouster common stock and Velodyne common stock before deciding how to vote with respect to any of the proposals described in this joint proxy statement/prospectus. Ouster common stock is traded on the New York Stock Exchange, or the NYSE, under the symbol “OUST” and Velodyne common stock is traded on the Nasdaq Global Select Market, or the Nasdaq, under the symbol “VLDR.”

At the effective time, all shares of Velodyne common stock owned by Ouster, Velodyne, Merger Sub I or Merger Sub II will be cancelled and will cease to exist, and no consideration will be delivered in exchange for such shares.

Treatment of Existing Ouster Equity Awards

Ouster equity awards will remain equity awards relating to shares of Ouster common stock. Ouster equity awards will continue to vest in accordance with the terms of the award agreements applicable to such Ouster equity awards. However, pursuant to the merger agreement, the mergers will be treated as a “change in control” or term of similar meaning for purposes of the Ouster compensation and benefit plans, including Ouster equity awards, which determination will result in certain “double trigger” benefits under such plans upon a qualifying termination of employment subsequent to the effective time.

Treatment of Existing Velodyne Equity Awards

At the effective time, all Velodyne options held by continuing service providers will be converted into Ouster Options with the same terms and conditions as applied to the option immediately prior to the effective time; however, each Ouster Option will cover a number of shares of Ouster common stock equal to the product

 

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of the number of shares of Velodyne common stock subject to the Velodyne option and the exchange ratio and will have an exercise price per share equal to the amount obtained by dividing the per-share exercise price of the Velodyne option by the exchange ratio. Each Velodyne option that is not held by a continuing service provider will terminate immediately prior to the effective time for no consideration.

All Velodyne RSU awards held by continuing service providers will be converted into an Ouster RSU award with the same terms and conditions as applied to the Velodyne RSU award immediately prior to the effective time; however, the Ouster RSU awards will cover a number of shares of Ouster common stock equal to the product of the number of shares of Velodyne common stock subject to the Velodyne RSU award and the exchange ratio. Each Velodyne RSU award that is not held by a continuing service provider will terminate immediately prior to the effective time for no consideration.

Each share of Ouster Restricted Stock issued upon conversion of a share of Velodyne Restricted Stock will be subject to the same substantial risk of forfeiture and will have the same terms and conditions, including vesting, as applied to the Velodyne Restricted Stock immediately prior to the effective time, except that any performance goals applicable to Velodyne Restricted Stock will be deemed achieved at the greater of target and actual performance and, as of the effective time, the Ouster Restricted Stock issued on conversion of Velodyne Restricted Stock that was originally scheduled to vest based on performance goals will be subject solely to the service-based vesting schedule otherwise applicable to the Velodyne Restricted Stock.

All shares of Velodyne Restricted Stock and all Velodyne RSU awards held by non-employee members of the Velodyne board of directors will vest in full and become free of any restrictions, including any risk of forfeiture, as of the effective time and will be treated as shares of Velodyne common stock under the merger agreement.

At the effective time, each Velodyne Warrant will be converted into an Ouster Warrant with the same terms and conditions as applied to such Velodyne Warrant immediately prior to the effective time; however, such Ouster Warrant will cover a number of shares of Ouster common stock equal to the product of the number of shares of Velodyne common stock subject to the Velodyne Warrant and the exchange ratio and will have an exercise price per share equal to the amount obtained by dividing the per share exercise price of the Velodyne Warrant by the exchange ratio. As of November 15, 2022, Velodyne had (i) outstanding publicly traded warrants exercisable for 4,480,425 shares of common stock at $11.50 per share; and (ii) an outstanding private warrant owned by an affiliate of Amazon Inc., exercisable for up to 39,784,213 shares of common stock at $4.16 per share, 50% of which will vest at the effective time.

The mergers will each be treated as a “change in control” or term of similar meaning for purposes of the Velodyne compensation and benefit plans, which determination will result in certain “double trigger” benefits under such plans upon certain qualifying terminations of employment of certain executives in connection with such change in control. For more information, see the information provided in the section entitled “Interests of Velodyne’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus.

Ouster’s Recommendation and Reasons for the Mergers

The Ouster board of directors unanimously recommends that Ouster stockholders vote “FOR” the Ouster share issuance proposal, “FOR” the Ouster reverse stock split proposal and “FOR” the Ouster adjournment proposal. In reaching its determinations and recommendations, the Ouster board of directors consulted with Ouster’s senior management and its outside legal and financial advisors, and considered a number of factors, including the following factors that weighed in favor of the mergers:

 

   

the benefits of a combined company, including the belief of the Ouster board of directors that the combined company would be well-positioned to achieve increased value for Ouster stockholders;

 

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the highly complementary portfolios of Ouster and Velodyne coupled with a unified engineering team for execution on the combined company’s future product roadmap at reduced costs, which are expected to provide the combined company with the opportunity to become a world leading lidar technology manufacturer;

 

   

the expectation that the combination of Ouster and Velodyne and their extended distribution network and future forward products will significantly expand the serviceable obtainable market of the combined company with a robust suite of products for its customers;

 

   

the expectation that the combined company will be well-capitalized with operational synergies from the combined enterprise, resulting in a stronger cash position that would enable strategic capital deployment by the combined company in order to accelerate the path to profitability and further increase stockholder value;

 

   

the favorability of the exchange ratio relative to the current assessment of the valuation of each company and of the expected synergies and other benefits of the mergers;

 

   

the governance structure for the combined company;

 

   

certain other factors, including historical information concerning Ouster’s and Velodyne’s respective businesses, financial condition, results of operations, earnings, trading prices, and management teams, Ouster’s prospects on a stand-alone basis and forecasted combined basis, the expected treatment of the mergers as a tax-free reorganization under the Code, the current and prospective business environments in which Ouster and Velodyne operate, including international, national and local economic conditions, and the likely effect of these factors on Ouster and the combined company; and

 

   

the terms of the merger agreement, taken as a whole.

For a more complete description of the factors considered by the Ouster board of directors in reaching this decision, including potentially negative factors against which these advantages and opportunities were weighed, and additional information on the recommendation of the Ouster board of directors, see the section entitled “The Mergers—Recommendation of the Ouster Board of Directors; Ouster’s Reasons for the Mergers” of this joint proxy statement/prospectus.

Velodyne’s Recommendation and Reasons for the Mergers

The Velodyne board of directors unanimously recommends that Velodyne stockholders vote “FOR” the Velodyne merger agreement proposal, “FOR” the Velodyne compensation proposal and “FOR” the Velodyne adjournment proposal. In reaching its determinations and recommendations, the Velodyne board of directors consulted with Velodyne ’s senior management and its outside legal and financial advisors, and considered a number of factors, including the following factors that weighed in favor of the mergers:

 

   

the importance of scale in the competitive market environments in which Velodyne and Ouster operate, and the potential for the mergers to enhance the combined company’s ability to invest, compete and provide innovative services in those environments;

 

   

certain other factors, including the opportunity to combine resources and expertise to better meet the evolving needs of customers of both companies, the historical and projected financial information concerning Ouster’s and Velodyne’s respective businesses, operations, financial conditions, earnings, strategies and future prospects, and Velodyne’s opportunities to create stockholder value in the future on a standalone basis and potential risks in the execution of Velodyne’s standalone strategic plan;

 

   

the structure of the transaction as a merger of equals, as well as the governance terms in the merger agreement that provide for an equal number of Board representatives appointed by each Velodyne and Ouster; and

 

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the terms of the merger agreement, taken as a whole.

For a more complete description of the factors considered by the Velodyne board of directors in reaching this decision, including potentially negative factors against which these advantages and opportunities were weighed, and additional information on the recommendation of the Velodyne board of directors, see the section entitled “The Mergers—Recommendation of the Velodyne Board of Directors; Velodyne’s Reasons for the Mergers” of this joint proxy statement/prospectus.

Opinion of Barclays, Ouster’s Financial Advisor (Annex F)

Ouster engaged Barclays Capital Inc., which is referred to as Barclays, to act as its financial advisor with respect to a potential combination of Ouster and Velodyne, pursuant to an engagement letter dated September 16, 2022. On November 4, 2022, Barclays rendered its oral opinion (which was subsequently confirmed in writing) to the Ouster board of directors that, as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, the exchange ratio to be paid by Ouster in the mergers was fair, from a financial point of view, to Ouster.

The full text of Barclays’ written opinion, dated as of November 4, 2022, is attached as Annex F to this joint proxy statement/prospectus. Barclays’ written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by Barclays in rendering its opinion. You are encouraged to read the opinion carefully in its entirety. The following is a summary of Barclays’ opinion and the methodology that Barclays used to render its opinion. This summary is qualified in its entirety by reference to the full text of the opinion. Barclays’ opinion, the issuance of which was approved by Barclays’ Fairness Opinion Committee, is addressed to the Ouster board of directors, addresses only the fairness, from a financial point of view, of the Exchange Ratio to be paid by Ouster in the mergers and does not constitute a recommendation to any stockholder of Ouster as to how such stockholder should vote with respect to the mergers or any other matter.

For a further discussion of Barclays’ opinion, see “The Mergers—Opinion of Barclays, Ouster’s Financial Advisor” of this joint proxy statement/prospectus.

Opinion of BofA Securities, Velodyne’s Financial Advisor (Annex G)

On November 4, 2022, at a meeting of Velodyne’s board of directors held to evaluate the mergers, BofA Securities delivered to the Velodyne board of directors an oral opinion, which was confirmed by delivery of a written opinion, dated November 4, 2022, to the effect that, as of the date of the opinion and based on and subject to various assumptions and limitations described in its written opinion, the exchange ratio provided for in the first merger was fair, from a financial point of view, to holders of Velodyne common stock. The full text of the written opinion, dated November 4, 2022, of BofA Securities, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex G to this document and is incorporated by reference herein in its entirety. BofA Securities provided its opinion to the Velodyne board of directors (in its capacity as such) for the benefit and use of Velodynes board of directors in connection with and for purposes of its evaluation of the exchange ratio from a financial point of view. BofA Securities opinion does not address any other aspect of the mergers and no opinion or view was expressed as to the relative merits of the mergers in comparison to other strategies or transactions that might be available to Velodyne or in which Velodyne might engage or as to the underlying business decision of Velodyne to proceed with or effect the mergers. BofA Securities opinion does not address any other aspect of the mergers and does not constitute a recommendation to any stockholder as to how to vote or act in connection with the proposed mergers or any related matter.

 

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The Ouster Special Meeting

The Ouster special meeting will be held on January 26, 2023 at 9 a.m., Pacific Time, at the Ouster special meeting website, at www.virtualshareholdermeeting.com/OUST2023SM. The purposes of the Ouster special meeting are as follows:

 

   

Ouster Proposal #1: Ouster Share Issuance Proposal. To consider and vote on the Ouster share issuance proposal;

 

   

Ouster Proposal #2: Ouster Reverse Stock Split Proposal. To consider and vote on the Ouster reverse stock split proposal; and

 

   

Ouster Proposal #3: Ouster Adjournment Proposal. To consider and vote on the Ouster adjournment proposal.

Completion of the mergers is conditioned on the approval of the Ouster share issuance proposal by Ouster stockholders. Approval of either of the Ouster reverse stock split proposal or the Ouster adjournment proposal is not a condition to the obligation of either Ouster or Velodyne to complete the mergers.

Only holders of record of issued and outstanding shares of Ouster common stock as of the close of business on December 13, 2022, the record date for the Ouster special meeting, are entitled to notice of, and to vote at, the Ouster special meeting. Ouster stockholders may cast one vote for each share of Ouster common stock that Ouster stockholders held as of that record date.

Assuming a quorum is present at the Ouster special meeting, approval of the Ouster share issuance proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) at the Ouster special meeting on the Ouster share issuance proposal. An abstention, a broker non-vote or the failure of an Ouster stockholder not present at the meeting to vote will have no effect on the outcome of the Ouster share issuance proposal.

Assuming a quorum is present at the Ouster special meeting, the approval of the Ouster reverse stock split proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Ouster common stock entitled to vote at the Ouster special meeting on the Ouster reverse stock split proposal. Accordingly, an Ouster stockholder’s abstention from voting or the failure of an Ouster stockholder not present at the meeting to vote will have the same effect as a vote “AGAINST” the Ouster reverse stock split proposal. We do not expect any broker non-votes in connection with the Ouster reverse stock split proposal.

If there is a quorum present, approval of the Ouster adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) at the Ouster special meeting on the Ouster adjournment proposal. In that case, an abstention, a broker non-vote or the failure of an Ouster stockholder not present at the meeting to vote will have no effect on the outcome of the Ouster adjournment proposal. If a quorum is not present, then either (i) the person presiding over the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, or represented by proxy, shall have power to adjourn the Ouster special meeting. Accordingly, in the case of (ii), an Ouster stockholder’s abstention from voting, a broker non-vote or the failure of an Ouster stockholder not present at the meeting to vote will have the same effect as a vote “AGAINST” the Ouster adjournment proposal.

The Velodyne Special Meeting

The Velodyne special meeting will be held on January 26, 2023 at 9 a.m., Pacific Time, at Velodyne’s headquarters at 5521 Hellyer Avenue, San Jose, CA 95138. The purposes of the Velodyne special meeting are as follows:

 

   

Velodyne Proposal #1: Adoption of the Merger Agreement. To consider and vote on the merger agreement proposal;

 

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Velodyne Proposal #2: Velodyne Compensation Proposal. To consider and vote on the merger-related compensation proposal; and

 

   

Velodyne Proposal #3: Adjournment of the Velodyne Special Meeting. To adjourn the Velodyne special meeting to a later date or dates, if necessary or appropriate, to allow time to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the Velodyne special meeting.

Completion of the mergers is conditioned on the approval of the Velodyne merger agreement proposal by Velodyne stockholders. Approval of either of the Velodyne compensation proposal or the Velodyne adjournment proposal is not a condition to the obligation of either Ouster or Velodyne to complete the mergers.

Only holders of record of issued and outstanding shares of Velodyne common stock as of the close of business on December 5, 2022, the record date for the Velodyne special meeting, are entitled to notice of, and to vote at, the Velodyne special meeting. Velodyne stockholders may cast one vote for each share of Velodyne common stock that Velodyne stockholders held as of that record date.

Assuming a quorum is present at the Velodyne special meeting, the approval of the merger agreement proposal by Velodyne stockholders requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Velodyne common stock entitled to vote at the Velodyne special meeting on the Velodyne merger agreement proposal. An abstention, a broker non-vote or the failure of a Velodyne stockholder not present at the meeting to vote (including the failure of a Velodyne stockholder who holds shares in “street name” through a bank, broker or other nominee to give voting instructions to that bank, broker or other nominee) will have the same effect as a vote cast “AGAINST” the proposal to adopt the merger agreement.

Assuming a quorum is present at the Velodyne special meeting, approval of the Velodyne compensation proposal requires the affirmative vote of the holders of a majority of the votes cast at the Velodyne special meeting on the Velodyne compensation proposal. An abstention, a broker non-vote or the failure of a Velodyne stockholder not present at the meeting to vote (including the failure of a Velodyne stockholder who holds shares in “street name” through a bank, broker or other nominee to give voting instructions to that bank, broker or other nominee) will have no effect on the outcome of the Velodyne compensation proposal.

Whether or not there is a quorum, approval of the Velodyne adjournment proposal requires the affirmative vote of the holders of a majority of the votes cast at the Velodyne special meeting on the Velodyne adjournment proposal and the chairman of the Velodyne special meeting also has the power to adjourn such Velodyne special meeting from time to time. An abstention, a broker non-vote or the failure of a Velodyne stockholder not present at the meeting to vote (including the failure of a Velodyne stockholder who holds shares in “street name” through a bank, broker or other nominee to give voting instructions to that bank, broker or other nominee) will have no effect on the outcome of the Velodyne adjournment proposal.

Interests of Ouster’s Directors and Executive Officers in the Mergers

In considering the recommendations of the Ouster board of directors, Ouster stockholders should be aware that Ouster directors and executive officers have interests in the mergers, including financial interests that may be different from, or in addition to, the interests of other Ouster stockholders generally. The Ouster board of directors was aware of and considered such interests, among other matters, in reaching its decision to approve the merger agreement and the transactions contemplated by the merger agreement.

These interests include:

 

   

the transactions contemplated by the merger agreement will be treated as a “change in control” or term of similar meaning for purposes of the Ouster compensation and benefit plans, including with respect to Ouster equity awards held by directors and executive officers, subject to certain limitations;

 

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Ouster’s executive officers may be entitled to enhanced severance benefits in the event of a qualifying termination of employment within the period beginning three months prior to and ending twelve months following the effective time;

 

   

the merger agreement provides that certain members of the Ouster board of directors will become directors of the combined company following the mergers; and

 

   

certain executive officers of Ouster may become executive officers of the combined company following the mergers, including Angus Pacala, who will the remain as chief executive officer of the combined company.

 

For a more complete description of these interests, see the information provided in the section entitled “Interests of Ouster’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus.

Interests of Velodyne’s Directors and Executive Officers in the Mergers

In considering the recommendations of the Velodyne board of directors, Velodyne stockholders should be aware that Velodyne directors and executive officers have interests in the mergers, including financial interests that may be different from, or in addition to, the interests of other Velodyne stockholders generally. The Velodyne board of directors was aware of and considered such interests, among other matters, in reaching its decision to approve the merger agreement and the transactions contemplated by the merger agreement.

These interests include, among others:

 

   

the transactions contemplated by the merger agreement will be treated as a “change in control” or term of similar meaning for purposes of the Velodyne compensation and benefit plans, including with respect to Velodyne equity awards held by directors and executive officers, subject to certain limitations;

 

   

Velodyne’s executive officers may be entitled to enhanced severance benefits, including the acceleration of outstanding Velodyne equity awards, in the event of a qualifying termination of employment within the period beginning three months prior to and ending twelve months following the effective time;

 

   

All Velodyne Restricted Stock and Velodyne RSU awards held by non-employee members of the Velodyne board of directors will be subject to accelerated vesting, and will become free of any restrictions and risks of forfeiture, as of the effective time;

 

   

the merger agreement provides that certain members of the Velodyne board of directors will become directors of the combined company following the mergers; and

 

   

certain executive officers of Velodyne may become executive officers of the combined company following the mergers.

 

For a more complete description of these interests, see the information provided in the section entitled “Interests of Velodyne’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus.

Governance of the Combined Company (Annex A)

The merger agreement, a copy of which is attached to this joint proxy statement/prospectus as Annex A, contains certain provisions relating to the governance of the combined company following completion of the mergers.

 

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Board of Directors

As of the effective time, the board of directors of the combined company will consist of eight directors, including: up to four directors designated by Ouster who were directors of Ouster prior to the effective time, who are referred to as the Ouster designees (which include Angus Pacala, the chief executive officer of Ouster, who is referred to as the Ouster CEO, who will be the chief executive officer of the combined company) and up to four directors designated by Velodyne who were directors of Velodyne prior to the effective time, who are referred to as the Velodyne designees (which include Dr. Ted Tewksbury, as the Executive Chairman of the board of directors of the combined company).

Each of the Ouster designees, other than Mr. Pacala, and each of the Velodyne designees, other than Dr. Tewksbury, will meet the independence standards of the Nasdaq or the NYSE as may be applicable with respect to the combined company as of the effective time.

Executive Chairman of the Board of Directors

Dr. Ted Tewksbury, Velodyne’s CEO and a member of the board of directors of Velodyne, will serve as the Executive Chairman of the board of directors of the combined company as of the effective time.

Chief Executive Officer

As of the effective time, Angus Pacala, the Ouster CEO, will serve as the chief executive officer of the combined company.

Name

Unless and until the parties agree that the combined company should have a different name than what is currently set forth in the charter of Ouster, the combined company’s name will be “Ouster, Inc.”

Headquarters

As of the effective time, the headquarters of the combined company will be located in San Francisco, California.

Certain Beneficial Owners of Ouster Common Stock

At the close of business on November 15, 2022, directors and executive officers of Ouster beneficially owned and were entitled to vote approximately 12,801,930 shares of Ouster common stock, collectively representing 6.94% of the shares of Ouster common stock outstanding on November 15, 2022. Ouster currently expects that all of its directors and executive officers will vote their shares “FOR” the Ouster share issuance proposal, “FOR” the Ouster reverse stock split proposal and “FOR” the Ouster adjournment proposal. For more information regarding the security ownership of Ouster directors and executive officers, see the information provided in the section entitled “Certain Beneficial Owners of Ouster Common Stock—Security Ownership of Ouster Directors and Executive Officers” of this joint proxy statement/prospectus.

Certain Beneficial Owners of Velodyne Common Stock

At the close of business on November 15, 2022, directors and executive officers of Velodyne beneficially owned and were entitled to vote approximately 10,223,339 shares of Velodyne common stock, collectively representing 4.3% of the shares of Velodyne common stock outstanding on November 15, 2022. Velodyne currently expects that all of its directors and executive officers will vote their shares “FOR” the Velodyne merger agreement proposal, “FOR” the Velodyne compensation proposal and “FOR” the Velodyne adjournment proposal. For more

 

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information regarding the security ownership of Velodyne directors and executive officers, see the information provided in the section entitled “Certain Beneficial Owners of Velodyne Common Stock—Security Ownership of Velodyne Directors and Executive Officers” of this joint proxy statement/prospectus.

Regulatory Approvals

Velodyne, Ouster, Merger Sub I and Merger Sub II shall use their reasonable best efforts to take or cause to be taken all appropriate action, and to do, or cause to be done, all things necessary to consummate and make effective the transactions contemplated by the merger agreement, including using their respective reasonable best efforts to obtain, or cause to be obtained, all waivers, permits, consents, approvals, authorizations, qualifications and orders or absence of orders of all governmental entities and parties to contracts with Velodyne, Ouster, or either company’s subsidiaries that may be or become necessary for the performance of obligations pursuant to the merger agreement and the consummation of the transactions contemplated thereby.

The parties shall cooperate and assist one another in good faith (i) in the preparation and making of the filings referred to in the merger agreement and, if requested, amending or furnishing additional information reasonably requested in connection with said filings, and (ii) in seeking, as promptly as reasonably practicable, to obtain all such waivers, permits, consents, approvals, authorizations, qualifications, orders or absence of orders. Each of Ouster, Velodyne, Merger Sub I and Merger Sub II agrees to make any filings required to be made pursuant to the HSR Act (if applicable) or other applicable antitrust laws with respect to the merger agreement as promptly as reasonably practicable and to supply as promptly as reasonably practicable to the appropriate governmental entities any information and documentary material that may be requested pursuant to the HSR Act or such other applicable antitrust laws, as applicable.

Ouster and Velodyne are required under the merger agreement to accept or agree to certain conditions (as described in the section entitled “The Merger Agreement—Cooperation; Efforts to Consummate” of this joint proxy statement/prospectus), including potential asset divestitures, in order to obtain such regulatory approvals.

Ownership of the Combined Company after the Mergers

As of the date of this joint proxy statement/prospectus, based on the exchange ratio of 0.8204 and the estimated number of shares of common stock of Ouster and Velodyne that will be outstanding immediately prior to the completion of the first merger, Ouster and Velodyne estimate that holders of shares of Ouster common stock as of immediately prior to the completion of the first merger will hold, in the aggregate, approximately 50% of the issued and outstanding shares of common stock of the combined company (based on fully diluted shares outstanding of the combined company including equity awards (using the treasury stock method)) immediately following the completion of the first merger, and holders of shares of Velodyne common stock as of immediately prior to the completion of the first merger will hold, in the aggregate, approximately 50% of the issued and outstanding shares of common stock of the combined company (based on fully diluted shares outstanding of the combined company including equity awards (using the treasury stock method)) immediately following the completion of the first merger.

No Appraisal Rights

Neither Ouster stockholders nor Velodyne stockholders are entitled to appraisal rights under the DGCL.

Conditions to the Completion of the Mergers

Each party’s obligation to effect the mergers is subject to the satisfaction at closing or waiver at or prior to closing of each of the following conditions:

 

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receipt of the required Ouster stockholder vote on the Ouster share issuance proposal and the required Velodyne stockholder vote on the Velodyne merger agreement proposal;

 

   

the effectiveness of the registration statement of which this joint proxy statement/prospectus forms a part and the absence of a stop order by the SEC;

 

   

the absence of any law or order promulgated, entered, enforced, enacted or issued by a governmental authority which prohibits, restrains, or makes illegal the consummation of the mergers and shall continue in effect;

 

   

the receipt of any requisite waivers, consents, authorizations, orders pursuant to foreign direct investment laws or regulatory approvals;

 

   

the shares of Ouster common stock, including the shares of Ouster common stock to be issued to Velodyne stockholders in accordance with the merger agreement having been approved for listing on the NYSE, subject to official notice of issuance;

 

   

that no material adverse effect of the other party has occurred and is continuing since the date of the merger agreement;

 

   

the other party’s compliance with and performance of, in all material respects, all covenants, obligations and agreements under the merger agreement required to be complied with or performed by such party at or prior to the closing;

 

   

the accuracy of the representations and warranties of the other party to the extent required under the merger agreement;

 

   

the receipt by such party of a certificate of an executive officer of the other party certifying that the conditions with respect to representations and warranties and performance of obligations have been satisfied; and

 

   

the receipt by each party of an opinion from its counsel, in form and substance reasonably satisfactory to such party, dated as of the closing date, to the effect that, for U.S. federal income tax purposes, the mergers, taken together, will be treated as a “reorganization” within the meaning of Section 368(a) of the Code.

No Solicitation of Competing Proposals

Ouster and Velodyne have agreed that neither Ouster nor Velodyne, nor any of their respective subsidiaries, will, and that they will not permit their and their respective subsidiaries’ directors, officers, employees and other representatives to, directly or indirectly:

 

   

solicit, initiate, knowingly encourage, induce (including by way of furnishing information) or take any other action designed to facilitate, any inquiry or the making of any proposal that constitutes or would be reasonably expected to lead to a competing proposal;

 

   

engage in any negotiations or discussions regarding a competing proposal;

 

   

approve, endorse, recommend or enter into, or publicly propose to do any of the foregoing, any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or similar definitive agreement with respect to any competing proposal (excluding an acceptable confidentiality agreement);

 

   

take any action to make the provisions of any takeover statute inapplicable to any transactions contemplated by a competing proposal;

 

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terminate, amend, release, modify or knowingly fail to enforce any provision of, or grant any permission, waiver or request under, any standstill, confidentiality or similar agreement entered into by the applicable party in respect of or in contemplation of a competing proposal (other than to the extent the Ouster board or the Velodyne board, as applicable, determines in good faith after consultation with its outside legal counsel that failure to take any of such actions would be a breach of its fiduciary duties under applicable law), or

 

   

propose to take any of the actions listed in the immediately preceding three paragraphs.

Notwithstanding the limitations described above, (A) Velodyne or Ouster, as applicable, may ascertain facts from any person making an unsolicited competing proposal for the sole purpose of the applicable board of directors’ informing itself about the terms of the competing proposal and the person that made it and (B) prior to the time, in the case of Velodyne, the required Velodyne stockholder vote to approve the merger agreement proposal is obtained or, in the case of Ouster, the required Ouster stockholder vote to approve the Ouster share issuance proposal is obtained, if such party receives a bona fide written competing proposal made after the date of the merger agreement that did not result from a breach in any respect of the above obligations, and the Velodyne board or Ouster board, as applicable, (i) determines in good faith (after receiving advice from its financial and outside legal advisors) that said competing proposal is or would reasonably be expected to lead to a superior proposal and (ii) determines in good faith after consulting with its outside legal counsel that a failure to take action with respect to such competing proposal would constitute a breach of its fiduciary duties under applicable law, Ouster or Velodyne or their representatives, as applicable, may take the following actions after giving prior notice to the other party to the merger agreement of its intent to do so: (x) furnish information with respect to Velodyne or Ouster, as applicable, to the person making such competing proposal pursuant to an acceptable confidentiality agreement and (y)  engage in discussions or negotiations with such person with respect to such competing proposal.

No Change of Recommendation

Subject to certain exceptions described below, neither the Ouster board of directors nor the Velodyne board of directors, including any committee thereof, may make a change of recommendation (as defined in the section entitled “The Merger Agreement—No Change of Recommendation” of this joint proxy statement/prospectus).

Permitted Change of Recommendation–Intervening Event

Prior to the time, in the case of Ouster, the required Ouster stockholder vote to approve the Ouster share issuance proposal is obtained or, in the case of Velodyne, the required Velodyne stockholder vote to approve the Velodyne merger agreement proposal is obtained, the Ouster board of directors or the Velodyne board of directors, as applicable, may effect a change of recommendation if an intervening event (as defined in the section entitled “The Merger Agreement—No Change of Recommendation—Permitted Change of Recommendation—Intervening Event” of this joint proxy statement/prospectus) has occurred and is continuing, and the Ouster board of directors or Velodyne board of directors, as applicable, determines in good faith, after consultation with its outside counsel, that the failure to make a change in recommendation in response to such intervening event would constitute a breach of the directors’ fiduciary duties under applicable law, and meets certain other conditions as described in the section entitled “The Merger Agreement—No Change of Recommendation—Permitted Change of Recommendation—Intervening Event” of this joint proxy statement/prospectus.

Permitted Change of Recommendation–Superior Proposal

Prior to the time, in the case of Ouster, the required Ouster stockholder vote to approve the Ouster share issuance proposal is obtained or, in the case of Velodyne, the required Velodyne stockholder vote to approve the Velodyne merger agreement proposal is obtained, the Ouster board of directors or the Velodyne board of

 

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directors, as applicable, may effect a change of recommendation if such party receives a bona fide written competing proposal that did not result from a breach in any respect of such party’s obligations under the merger agreement, and the Velodyne board of directors or Ouster board of directors, as applicable, (i) determines in good faith (after receiving advice from its financial and outside legal advisors) that said competing proposal is or would reasonably be expected to lead to a superior proposal and (ii) determines in good faith after consulting with its outside legal counsel that a failure to take action with respect to such competing proposal would constitute a breach of its fiduciary duties under applicable law, and meets certain other conditions as described in the section entitled “The Merger Agreement—No Change of Recommendation—Permitted Change of Recommendation—Superior Proposal” of this joint proxy statement/prospectus.

Termination of the Merger Agreement

Termination by Mutual Consent

The merger agreement may be terminated and the mergers and the other transactions contemplated by the merger agreement may be abandoned at any time prior to the effective time by mutual written consent of Ouster and Velodyne.

Termination by Either Ouster or Velodyne

Either Ouster or Velodyne may terminate the merger agreement and the mergers may be abandoned at any time prior to the effective time if:

 

   

any law or final and non-appealable order has been promulgated, entered, enforced, enacted or issued or deemed applicable to the mergers by any governmental entity which permanently prohibits, restrains or makes illegal the consummation of the mergers;

 

   

the first merger has not been completed by 11:59 p.m., Pacific Time on May 4, 2023, referred to as the outside date (unless such date has been extended to August 4, 2023, which extension is available automatically but only in limited circumstances related to antitrust or similar law);

 

   

the required Ouster stockholder approval for the Ouster share issuance proposal has not been obtained at the Ouster special meeting or at any adjournment or postponement thereof; or

 

   

the required Velodyne stockholder approval of the Velodyne merger agreement proposal has not been obtained at the Velodyne special meeting or at any adjournment or postponement thereof.

For a more complete description of these termination rights, see the information provided in the section entitled “The Merger Agreement—Termination of the Merger Agreement—Termination by Either Ouster or Velodyne” of this joint proxy statement/prospectus.

Termination by Ouster

Ouster may terminate the merger agreement and the mergers may be abandoned at any time prior to the effective time:

 

   

if there has been a breach by Velodyne of any of its representations, warranties, covenants or agreements under the merger agreement, which breach resulted in (i) the conditions to the merger agreement not being satisfied and (ii) which such breach is not curable prior to the outside date, or if curable prior to the outside date, has not been cured within the earlier of (a) 20 business days after the giving of notice thereof by Ouster to Velodyne or (b) one business day prior to the outside date;

 

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if the Velodyne board of directors has effected an adverse recommendation change; or

 

   

if, prior to the time the required Ouster stockholder approval of the Ouster share issuance proposal is obtained, the Ouster board of directors has effected an adverse recommendation change in respect of a superior proposal in compliance with the merger agreement, and concurrently with termination of the merger agreement, Ouster enters into a definitive agreement implementing such superior proposal, but only if Ouster is not in breach of the provisions of the merger agreement relating to competing proposals.

Termination by Velodyne

Velodyne may terminate the merger agreement and the mergers may be abandoned at any time prior to the effective time:

 

   

if there has been a breach by Ouster, Merger Sub I or Merger Sub II of any of their representations, warranties, covenants or agreements under the merger agreement, which breach resulted in (i) the conditions to the merger agreement not being satisfied and (ii) which such breach is not curable prior to the outside date, or if curable prior to the outside date, has not been cured within the earlier of (a) 20 business days after the giving of notice thereof by Velodyne to Ouster or (b) one business day prior to the outside date;

 

   

if the Ouster board of directors has effected an adverse recommendation change; or

 

   

if, prior to the time the required Velodyne stockholder approval of the Velodyne merger agreement proposal is obtained, the Velodyne board of directors has effected an adverse recommendation change in respect of a superior proposal in compliance with the merger agreement, and concurrently with termination of the merger agreement, Velodyne enters into a definitive agreement implementing such superior proposal, but only if Velodyne is not in breach of the provisions of the merger agreement relating to competing proposals.

Termination Fees

Ouster will be required to pay to Velodyne a termination fee of $7,000,000 if the merger agreement is terminated:

 

   

by Velodyne, due to the Ouster board of directors making a change of recommendation;

 

   

by Velodyne, due to Ouster’s breach or failure to perform any of its representations, warranties or covenants contained in the merger agreement, which breach or failure to perform would result in a failure of conditions to the merger agreement and which is incapable of being cured by Ouster prior to the outside date or otherwise is not cured by the earlier of (A) 20 business days following written notice to Ouster by Velodyne of such breach or (B) the first business day prior to the outside date, if (i) a competing proposal for Ouster has been publicly announced or otherwise communicated to the Ouster board (and not withdrawn) prior to the date of termination and (ii) within 12 months after such termination, either (A) Ouster consummates a competing proposal or (B) Ouster has entered into a definitive agreement for a competing proposal (in each case, with all references to 20% being changed to 50% in the definition of “competing proposal”);

 

   

if the Ouster stockholder meeting has not occurred, by either Velodyne due to a breach by Ouster, Merger Sub I, or Merger Sub II if such breach resulted in the conditions to the merger agreement not being satisfied by the outside date or by either Ouster or Velodyne due to the mergers not having been completed by the outside date, if (i) a competing proposal for Ouster has been publicly announced or otherwise communicated to the Ouster board (and not withdrawn) prior to the date of such termination

 

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and (ii) within 12 months after such termination, either (A) Ouster consummates a competing proposal or (B) Ouster has entered into a definitive agreement for a competing proposal (in each case, with all references to 20% being changed to 50% in the definition of “competing proposal”); or

 

   

by either Ouster or Velodyne due to Ouster’s not obtaining the required Ouster stockholder approval of the Ouster share issuance proposal, if (i) a competing proposal for Ouster has been publicly announced or otherwise communicated to the Ouster board (and not withdrawn) prior to the Ouster special meeting and (ii) within 12 months after such termination, either (A) Ouster consummates a competing proposal or (B) Ouster has entered into a definitive agreement for a competing proposal (in each case, with all references to 20% being changed to 50% in the definition of “competing proposal”).

Velodyne will be required to pay to Ouster a termination fee of $7,000,000 if the merger agreement is terminated:

 

   

by Ouster, due to the Velodyne board of directors making a change of recommendation;

 

   

by Ouster, due to Velodyne’s breach or failure to perform any of its representations, warranties or covenants contained in the merger agreement, which breach or failure to perform would result in a failure of conditions to the merger agreement and which is incapable of being cured by Velodyne prior to the outside date or otherwise is not cured by the earlier of (A) 20 business days following written notice to Velodyne by Ouster of such breach or (B) the first business day prior to the outside date, if (i) a competing proposal for Velodyne has been publicly announced or otherwise communicated to the Velodyne board (and not withdrawn) prior to the date of termination and (ii) within 12 months after such termination, either (A) Velodyne consummates a competing proposal or (B) Velodyne has entered into a definitive agreement for a competing proposal (in each case, with all references to 20% being changed to 50% in the definition of “competing proposal”);

 

   

if the Velodyne stockholder meeting has not occurred, by either Ouster due to a breach by Velodyne if such breach resulted in the conditions to the merger agreement not being satisfied by the outside date or by either Ouster or Velodyne due to the mergers not having been completed by the outside date, if (i) a competing proposal for Velodyne has been publicly announced or communicated to the Velodyne board (and not withdrawn) prior to the date of such termination and (ii) within 12 months after such termination, either (A) Velodyne consummates a competing proposal or (B) Velodyne has entered into a definitive agreement for a competing proposal (in each case, with all references to 20% being changed to 50% in the definition of “competing proposal”); or

 

   

by either Ouster or Velodyne due to Velodyne’s not obtaining the required Velodyne stockholder approval of the Velodyne merger agreement proposal, if (i) a competing proposal for Velodyne has been publicly announced or communicated to the Velodyne board (and not withdrawn) prior to the Velodyne special meeting and (ii) within 12 months after such termination, either (A) Velodyne consummates a competing proposal or (B) Velodyne has entered into a definitive agreement for a competing proposal (in each case, with all references to 20% being changed to 50% in the definition of “competing proposal”).

Voting and Support Agreement

Ouster Voting and Support Agreement

Concurrently with the execution of the merger agreement, the directors and executive officers of Ouster and Banyan Venture Holdings LLC, an Ouster stockholder, entered into voting and support agreements, which are referred to as the Ouster voting and support agreements, with respect to all shares of Ouster common stock owned of record or beneficially by that director, executive officer or stockholder of Ouster as of November 4, 2022, which are referred to, together with any additional shares or other voting securities of Ouster of which that

 

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specified director, executive officer or stockholder of Ouster acquires beneficial ownership after November 4, 2022 but prior to the Ouster record date, as the covered Ouster shares.

Subject to the terms and conditions set forth in the Ouster voting and support agreements, from November 4, 2022 until the termination of the Ouster voting and support agreements, each of signatories party thereto agreed to:

 

   

appear at each meeting of the stockholders of Ouster, or adjournment or postponement thereof, to vote on any matter contemplated by the Ouster voting and support agreements and to cause their respective covered Ouster shares to be counted as present thereat for purposes of calculating a quorum; and

 

   

vote their respective covered Ouster shares in favor of (i) the adoption of the merger agreement and (ii) the approval of any proposal to adjourn the Ouster stockholder meeting to a later date, if there are not sufficient affirmative votes (electronically or by proxy) to obtain the required Ouster vote to approve the Ouster share issuance proposal on the date on which such meeting is held; and against (i) any acquisition proposal with respect to Ouster in opposition to, or in competition with, the mergers and the transactions contemplated by the merger agreement and (ii) any other action, agreement or transaction reasonably expected to impede, interfere with, delay, postpone or discourage the proposed transaction.

You should read the section entitled “The Ancillary Agreements” of this joint proxy statement/prospectus for a more complete discussion of the Ouster voting and support agreements.

Velodyne Voting and Support Agreement

Concurrently with the execution of the merger agreement, the directors and executive officers of Velodyne entered into voting and support agreements, which are referred to as the Velodyne voting and support agreements, with respect to all shares of Velodyne common stock owned of record or beneficially by that director and executive officer of Velodyne as of November 4, 2022, which are referred to, together with any additional shares or other voting securities of Velodyne of which that specified director and executive officer of Velodyne acquires beneficial ownership after November 4, 2022 but prior to the Velodyne record date, as the covered Velodyne shares.

Subject to the terms and conditions set forth in the Velodyne voting and support agreements, from November 4, 2022 until the termination of the Velodyne voting and support agreements, each of the directors and executive officers of Velodyne party thereto agreed to:

 

   

appear at each meeting of the stockholders of Velodyne, or adjournment or postponement thereof, to vote on any matter contemplated by the Velodyne voting and support agreements and to cause their respective covered Velodyne shares to be counted as present thereat for purposes of calculating a quorum; and

 

   

vote their respective covered Velodyne shares in favor of (i) the adoption of the merger agreement and (ii) the approval of any proposal to adjourn the Velodyne stockholder meeting to a later date, if there are not sufficient affirmative votes (in person or by proxy) to obtain the required Velodyne vote to approve the Velodyne merger agreement proposal on the date on which such meeting is held; and against (i) any acquisition proposal with respect to Velodyne in opposition to, or in competition with, the mergers and the transactions contemplated by the merger agreement and (ii) any other action, agreement or transaction reasonably expected to impede, interfere with, delay, postpone or discourage the proposed transaction.

You should read the section entitled “The Ancillary Agreements” of this joint proxy statement/prospectus for a more complete discussion of the Velodyne voting and support agreements.

 

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Accounting Treatment

The mergers will be accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations. U.S. GAAP requires that one of the companies in the mergers be designated as the acquirer for accounting purposes based on the evidence available. Ouster expects that it will be treated as the acquiring entity for accounting purposes. Accordingly, Ouster will measure the assets acquired and liabilities assumed at their fair values including net tangible and identifiable intangible assets acquired and liabilities assumed as of the closing date of the first merger, with any excess purchase price over those fair values being recorded as goodwill. In identifying Ouster as the acquiring entity for accounting purposes, Ouster and Velodyne took into account the voting rights of all equity instruments, the intended corporate governance structure of the combined company, and the size of each of the companies. No single factor was the sole determinant in the overall conclusion that Ouster is the acquirer for accounting purposes, rather all factors were considered in arriving at such conclusion.

Certain Tax Matters

Ouster and Velodyne intend to report and, except to the extent otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code, will report, for U.S., state and other relevant tax purposes, the mergers, taken together, as a “reorganization” within the meaning of Section 368(a) of the Code. Each of Ouster and Velodyne will use reasonable best efforts to cause the mergers to qualify, and will not take any action or cause any action to be taken which action would reasonably be expected to prevent the mergers, taken together, from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code. The merger agreement is intended to constitute a “plan of reorganization” for purposes of Sections 354 and 361 of the Code and U.S. Treasury regulations Sections 1.368-2(g) and 1.368-3(a), and each of Ouster and Velodyne have adopted it as such.

Each of Ouster and Velodyne will use reasonable best efforts to obtain an opinion of its counsel that the mergers, taken together, qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Ouster and Velodyne, respectively, will each deliver to each party’s counsel a letter setting forth certain representations and warranties, which each party’s counsel will be entitled to rely on in delivering its opinion (as described in the section entitled “U.S. Federal Income Tax Consequences of the Mergers—U.S. Federal Income Tax Consequences of the Mergers to U.S. Holders of Velodyne Common Stock” of this joint proxy statement/prospectus).

Comparison of Stockholders’ Rights

Upon completion of the first merger, Velodyne stockholders receiving shares of Ouster common stock will become stockholders of the combined company, and their rights will be governed by the DGCL and the governing corporate documents of the combined company in effect at the effective time. Velodyne stockholders will have different rights once they become stockholders of the combined company due to differences between the governing corporate documents of Velodyne and the proposed governing corporate documents of the

combined company, as described in more detail under the section entitled “Comparison of Stockholders’ Rights” of this joint proxy statement/prospectus.

Listing of Ouster Common Stock; Delisting and Deregistration of Velodyne Common Stock

The shares of Ouster common stock and Ouster Warrants to be issued in connection with the mergers are expected to be listed for trading on the NYSE under the symbols “OUST” and “OUST WSA,” respectively. Ouster will use its reasonable best efforts to cause the shares of Ouster common stock and Ouster Warrants to be issued in connection with the mergers to be approved for listing on the NYSE.

 

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If the mergers are completed, Velodyne common stock will be delisted from the Nasdaq and deregistered under the Exchange Act, and Velodyne will no longer be required to file periodic reports with the SEC with respect to Velodyne common stock.

Velodyne has agreed to cooperate with Ouster to take, or cause to be taken, all actions necessary to delist Velodyne common stock from the Nasdaq and to terminate their registration under the Exchange Act after the effective time.

Risk Factors

In evaluating the merger agreement, the mergers or the issuance of shares of Ouster common stock in the mergers, you should carefully read this joint proxy statement/prospectus and give special consideration to the factors discussed in the section entitled “Risk Factors” of this joint proxy statement/prospectus.

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following tables set forth selected unaudited pro forma condensed combined financial information giving effect to the planned mergers of Ouster and Velodyne. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2022 and the fiscal year ended December 31, 2021, give effect to the mergers as if they had been consummated on January 1, 2021, the beginning of Ouster’s most recently completed fiscal year. The unaudited pro forma condensed combined balance sheet as of September 30, 2022 gives effect to the mergers as if they had been consummated on September 30, 2022.

The selected unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or consolidated financial condition of the combined company would have been had the mergers actually occurred on the dates indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition of the combined company for any future period or as of any future date.

The selected unaudited pro forma condensed combined financial data as of and for the nine months ended September 30, 2022 and for the year ended December 31, 2021 are derived from the unaudited pro forma condensed combined financial information included under the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” of this joint proxy statement/prospectus and should be read in conjunction with that information. The unaudited pro forma adjustments are based upon available information and certain assumptions that Ouster and Velodyne believe are reasonable under the circumstances. The unaudited pro forma condensed combined financial information also gives effect to the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements included in this joint proxy statement/prospectus. For more information, please see the section titled “Unaudited Pro Forma Condensed Combined Financial Information” of this joint proxy statement/prospectus.

 

(In thousands, except per share data)    Nine Months Ended
September 30, 2022
     Year Ended
December 31, 2021
 

Unaudited Pro Forma Condensed Combined Statement of Operations Data:

     

Revenues

   $ 57,419      $ 95,502  

Net loss

   $ (234,332    $ (324,879

Net loss per share:

     

Basic and diluted

   $ (0.63    $ (0.99

 

(In thousands)    As of September 30,
2022
 

Unaudited Pro Forma Condensed Combined Balance Sheet Data:

  

Cash and cash equivalents, and short-term investments

   $ 332,032  

Total assets

   $ 583,206  

Total liabilities

   $ 117,546  

Total stockholders’ equity

   $ 465,660  

 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

Presented below are Velodyne’s historical per share data for the nine months ended September 30, 2022 and the fiscal year ended December 31, 2021, Ouster’s historical per share data for the nine months ended September 30, 2022 and the fiscal year ended December 31, 2021, unaudited pro forma combined per share data for the nine months ended September 30, 2022 and the fiscal year ended December 31, 2021, and unaudited pro forma equivalent data for the nine months ended September 30, 2022 and the fiscal year ended December 31, 2021. This information should be read together with the consolidated financial statements and related notes of Velodyne and Ouster that are incorporated by reference into this joint proxy statement/prospectus and with the unaudited pro forma condensed combined financial data included under the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” of this joint proxy statement/prospectus. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the mergers had been completed as of the beginning of the periods presented or on the dates presented, nor is it necessarily indicative of the future operating results or financial position of the combined company. The historical book value per share is computed by dividing total stockholders’ equity by the number of shares outstanding at the end of the relevant period. The pro forma net loss per share of the combined company is computed by dividing the pro forma net loss by the pro forma weighted average number of basic and diluted shares outstanding. The pro forma book value per share of the combined company is computed by dividing total pro forma stockholders’ equity by the pro forma number of shares outstanding at the end of the period.

 

     Nine Months Ended
September 30, 2022
    Year Ended
December 31, 2021
 

Velodyne Historical Data

    

Historical per share of common stock

    

Basic and diluted net loss per share

   $ (0.66   $ (1.09

Book value per share (at period end)

   $ 0.93     $ 1.52  

 

     Nine Months Ended
September 29, 2022
    Year Ended
December 31, 2021
 

Ouster Historical Data

    

Historical per share of common stock

    

Basic and diluted net loss per share

   $ (0.55   $ (0.70

Book value per share (at period end)

   $ 1.11     $ 1.51  

 

     Nine Months Ended
September 30, 2022
    Year Ended
December 31, 2021
 

Pro Forma Combined Data

    

Pro Forma per share of common stock

    

Basic and diluted net loss per share

   $ (0.63   $ (0.99

Book value per share (at period end)

   $ 1.24     $ N/A (1) 

 

     Nine Months Ended
September 30, 2022
    Year Ended
December 31, 2021
 

Velodyne Pro Forma Equivalent Data

    

Pro Forma per share of common stock

    

Basic and diluted net loss per share

   $ (0.52   $ (0.81

Book value per share (at period end)

   $ 1.02     $ N/A (1) 

 

(1)

Pro Forma balance sheet information as of December 31, 2021 is not required and as such is not included in the table.

 

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COMPARISON OF OUSTER AND VELODYNE MARKET PRICES AND IMPLIED VALUE OF MERGER CONSIDERATION

The following table presents trading information for Ouster common stock on the NYSE and Velodyne common stock on the Nasdaq, respectively, on November 4, 2022, the last trading day before announcement of the mergers and November 22, 2022, the most recent practicable trading day before the date of this joint proxy statement/prospectus. The table also shows the estimated equivalent per-share value of the per share consideration proposed for each share of Velodyne common stock as of the same two dates. This estimated equivalent per-share value was calculated by multiplying the closing price of a share of Ouster common stock on the relevant date by the exchange ratio of 0.8204 shares for each share of Velodyne common stock.

 

     Velodyne Common Stock      Ouster Common Stock      Equivalent Per-Share Value  
     High      Low      Close      High      Low      Close      High      Low      Close  

Date

                          

November 4, 2022

   $ 0.95      $ 0.86      $ 0.89      $ 1.21      $ 1.12      $ 1.17      $ 0.99      $ 0.92      $ 0.96  

November 22, 2022

   $ 1.02      $ 0.97      $ 0.98      $ 1.24      $ 1.15      $ 1.20      $ 1.02      $ 0.94      $ 0.98  

 

The market prices of Ouster common stock and Velodyne common stock fluctuated prior to and have fluctuated after the date of the announcement of the merger agreement and may continue to fluctuate prior to the completion of the first merger. No assurance can be given concerning the market prices of Ouster common stock or Velodyne common stock before completion of the first merger or of the market price of the common stock of the combined company after completion of the first merger. Because the exchange ratio is fixed and will not be adjusted for changes in the market prices of either Ouster common stock or Velodyne common stock, the market price of Ouster common stock (and, therefore, the value of the merger consideration) when received by Velodyne stockholders after the first merger is completed could be greater than, less than or the same as shown in the table above. Accordingly, these comparisons may not provide meaningful information to Ouster stockholders and Velodyne stockholders in determining how to vote with respect to the proposals described in this joint proxy statement/prospectus. Ouster stockholders and Velodyne stockholders are encouraged to obtain current market quotations for Ouster common stock and Velodyne common stock and to review carefully the other information contained in this joint proxy statement/prospectus or incorporated by reference into this joint proxy statement/prospectus. For more information, see the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This registration statement on Form S-4, of which this joint proxy statement/prospectus forms a part, and the documents to which Ouster and Velodyne refer you to in this registration statement, as well as oral statements made or to be made by Ouster and Velodyne, include certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act, and Section 21E of the Exchange Act. The words “believe,” “continue,” “could,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the control of Ouster and Velodyne. Statements in or incorporated by reference into this registration statement regarding Ouster, Velodyne, or the proposed mergers, referred to as the proposed transaction, that are forward-looking, including statements regarding the anticipated benefits of the proposed transaction, the impact of the proposed transaction on Ouster’s and Velodyne’s employees, business and future financial and operating results, the amount and timing of synergies from the proposed transaction, and the closing date for the proposed transaction, are based on Ouster’s and Velodyne’s management’s estimates, assumptions and projections, and are subject to significant uncertainties and other factors, many of which are beyond Ouster’s and Velodyne’s control. These factors and risks include, but are not limited to:

 

   

weakening of global and/or regional economic conditions, generally or specifically in the lidar technology industry, which could decrease the demand for Ouster’s and Velodyne’s products and solutions;

 

   

the ability of Ouster or Velodyne to meet rapid demand shifts;

 

   

the ability of Ouster or Velodyne to continue technological innovation and introduce new products to meet customers’ rapidly changing requirements;

 

   

the companies’ customer bases;

 

   

the ability of Ouster or Velodyne to identify, effect and integrate acquisitions, joint ventures or other transactions;

 

   

the ability of Ouster or Velodyne to protect and enforce intellectual property rights;

 

   

operational, political and legal risks of Ouster’s and Velodyne’s international operations;

 

   

the increasing complexity of certain manufacturing processes;

 

   

raw material shortages and price increases;

 

   

changes in government regulations of the countries in which Ouster and Velodyne operate;

 

   

the fluctuation of currency exchange rates;

 

   

fluctuations in the market price of Ouster’s stock;

 

   

the ability of the companies to integrate their respective businesses promptly and effectively and to achieve the anticipated synergies and value-creation contemplated by the mergers; and

 

   

other risk factors and additional information.

In addition, material risks that could cause actual results to differ from forward-looking statements include: the inherent uncertainty associated with financial or other projections; the companies’ ability to obtain the approval of the proposed transaction by Velodyne stockholders and the approval of the Ouster share issuance proposal and the timing of the closing of the proposed transaction, including the risk that the conditions to the transaction are not satisfied on a timely basis or at all and the failure of the proposed transaction to close for any other reason; the risk that a consent or authorization that may be required for the proposed transaction is not

 

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obtained or is obtained subject to conditions that are not anticipated; unanticipated difficulties or expenditures relating to the proposed transaction, the response of business partners and retention as a result of the announcement and pendency of the proposed transaction; and the diversion of management time in connection with the proposed transaction.

For further discussion of these and other risks, contingencies and uncertainties applicable to Ouster and Velodyne, see the section entitled “Risk Factors” of this joint proxy statement/prospectus and in Ouster’s and Velodyne’s other filings with the SEC incorporated by reference into this joint proxy statement/prospectus. See also the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus for more information about the SEC filings incorporated by reference into this joint proxy statement/prospectus.

All subsequent written or oral forward-looking statements attributable to Ouster or Velodyne or any person acting on its or their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Neither Ouster nor Velodyne is under any obligation, and each expressly disclaims any obligation, to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise, except as may be required by law.

 

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RISK FACTORS

In deciding whether to vote for the Ouster share issuance proposal or the Ouster reverse stock split proposal, in the case of Ouster stockholders, or the adoption of the merger agreement, in the case of Velodyne stockholders, you are urged to carefully consider all of the information included or incorporated by reference in this joint proxy statement/prospectus, which is listed in the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus. You should also read and consider the risks associated with each of the businesses of Ouster and Velodyne because these risks will also affect the combined company. The risks associated with the business of Ouster can be found in Ouster’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and the risks associated with the business of Velodyne can be found in Velodyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as such risks may be updated or supplemented in each company’s subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K (excluding any information and exhibits furnished under Item 2.02 or 7.01 thereof), each of which are incorporated by reference into this joint proxy statement/prospectus. In addition, you are urged to carefully consider the following material risks relating to the mergers, the business of the combined company, the business of Ouster, and the business of Velodyne.

Risks Relating to the Mergers

The exchange ratio is fixed and will not be adjusted in the event of any change in either Ouster’s or Velodyne’s stock price.

Upon completion of the first merger, each share of Velodyne common stock outstanding immediately prior to the first merger will be converted into and become exchangeable for 0.8204 shares of Ouster common stock. This exchange ratio is fixed in the merger agreement and will not be adjusted for changes in the market price of either Ouster common stock or Velodyne common stock. The market prices of Ouster common stock and Velodyne common stock have fluctuated prior to and after the date of the announcement of the merger agreement and may continue to fluctuate from the date of this joint proxy statement/prospectus to the date of the Ouster special meeting and the Velodyne special meeting, respectively, and the date the first merger is consummated, and the market price of the common stock of the combined company may continue to fluctuate thereafter.

Because the value of the merger consideration will depend on the market price of Ouster common stock at the time the mergers are completed, Velodyne stockholders will not know or be able to determine at the time of the Velodyne special meeting the market value of the merger consideration they would receive upon completion of the first merger. Similarly, Ouster stockholders will not know or be able to determine at the time of the Ouster special meeting the market value of the shares of Ouster common stock to be issued pursuant to the merger agreement compared to the market value of the shares of Velodyne common stock that are being exchanged in the first merger.

Stock price changes may result from a variety of factors, including, among others, general market and economic conditions, changes in Ouster’s or Velodyne’s respective businesses, operations and prospects, reductions or changes in U.S. government spending or budgetary policies, market assessments of the likelihood that the mergers will be completed, interest rates, general market, industry and economic conditions and other factors generally affecting the respective prices of Ouster’s or Velodyne’s common stock, federal, state and local legislation, governmental regulation and legal developments in the industry segments in which Ouster or Velodyne operate, and the timing of the mergers.

Many of these factors are beyond Ouster’s and Velodyne’s control, and neither Ouster nor Velodyne are permitted to terminate the merger agreement solely due to a decline in the market price of the common stock of the other party. You are urged to obtain current market quotations for Ouster common stock and Velodyne common stock in determining whether to vote for the adoption of the merger agreement, or, in the case of the Ouster stockholders, whether to vote for the Ouster share issuance proposal and the Ouster reverse stock split proposal. In addition, see the section entitled “Comparison of Ouster and Velodyne Market Prices and Implied Value of Merger Consideration” of this joint proxy statement/prospectus.

 

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The mergers may be delayed or may not be completed and the merger agreement may be terminated in accordance with its terms, which could negatively impact Ouster and/or Velodyne.

The mergers are subject to a number of conditions that must be satisfied, some of which are beyond the control of Ouster and Velodyne, may not be satisfied or waived in a timely manner or at all, and, accordingly, the mergers may be delayed or not completed. These conditions include: the approval by Ouster stockholders of the Ouster share issuance proposal and approval by Velodyne stockholders of the Velodyne merger agreement proposal, approval for listing on the NYSE of the shares of Ouster common stock (including those to be issued pursuant to the merger agreement) (subject to official notice of issuance), the expiration or earlier termination of any applicable waiting period under U.S. antitrust and competition laws, the absence of governmental restraints or prohibitions preventing the consummation of the mergers, the effectiveness of the registration statement on Form S-4 registering the Ouster common stock issuable pursuant to the merger agreement and the absence of any stop order by the SEC with respect thereto. The obligation of each of Ouster and Velodyne to consummate the mergers is also conditioned on, among other things, the receipt by such party of a written opinion from counsel, to the effect that for U.S. federal income tax purposes the mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code (discussed further below), the absence of a material adverse effect on the other party, the truth and correctness of the representations and warranties made by the other party on the date of the merger agreement and on the closing date (subject to certain materiality qualifiers), and the performance by the other party in all material respects of its obligations under the merger agreement. No assurance can be given that the required consents and approvals will be obtained or that the required conditions to closing will be satisfied, and, if all required consents and approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions and timing of such consents and approvals. Any delay in completing the mergers could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that Ouster and Velodyne expect to achieve if the mergers are successfully completed within its expected time frame. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the mergers, see the section entitled “The Merger Agreement—Conditions to the Completion of the Mergers” of this joint proxy statement/prospectus.

Additionally, either Ouster or Velodyne may terminate the merger agreement under certain circumstances, including, among other reasons, if the first merger is not completed by 11:59 p.m. Pacific Time on May 4, 2023 (which date may be extended by three months under certain circumstances if certain regulatory approvals are not obtained by May 4, 2023). In addition, if the merger agreement is terminated under certain circumstances specified in the merger agreement, either party may be required to pay the other party a termination fee of $7,000,000. See the section entitled “The Merger Agreement—Termination of the Merger Agreement” of this joint proxy statement/prospectus and the section entitled “The Merger Agreement—Termination Fees” of this joint proxy statement/prospectus for a more complete discussion of the circumstances under which the merger agreement could be terminated and when a termination fee may be payable by Ouster or Velodyne.

If the mergers are not completed for any reason, including as a result of a failure to obtain the required Ouster stockholder vote to approve the Ouster share issuance proposal or the required Velodyne stockholder vote to approve the Velodyne merger agreement proposal, the ongoing businesses of Ouster and Velodyne may be adversely affected and, without realizing any of the benefits of having completed the mergers, Ouster and Velodyne would be subject to a number of risks, including the following:

 

   

each company may experience negative reactions from the financial markets, including negative impacts on its stock price;

 

   

each company may experience negative reactions from its suppliers, customers and employees;

 

   

each company will be required to pay their respective costs relating to the mergers, such as financial advisory, legal and accounting costs and associated fees and expenses, including, if applicable, a termination fee (with certain exceptions), whether or not the mergers are completed; and

 

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matters relating to the mergers (including integration planning) will require substantial commitments of time and resources by Ouster management and Velodyne management, which could otherwise have been devoted to day-to-day operations or to other opportunities that may have been beneficial to Ouster or Velodyne, as applicable, as an independent company.

The market price for shares of common stock of the combined company following the completion of the mergers may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of shares of Ouster common stock and Velodyne common stock.

Upon consummation of the mergers, Ouster stockholders and Velodyne stockholders will both hold shares of common stock in the combined company. The businesses of Ouster and Velodyne differ from each other, and, accordingly, the results of operations of the combined company will be affected by some factors that are different from those currently or historically affecting the results of operations of Ouster and Velodyne. For a discussion of the businesses of each of Ouster and Velodyne and some important factors to consider in connection with those businesses, please see the section entitled “Summary—The Parties to the Mergers” of this joint proxy statement/prospectus and the documents and information included elsewhere in this joint proxy statement/prospectus or incorporated by reference into this joint proxy statement/prospectus and listed under the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus.

The shares of common stock of the combined company to be received by Velodyne stockholders as a result of the first merger will have rights different from the shares of Velodyne common stock.

Upon consummation of the first merger, the rights of Velodyne stockholders, who will become stockholders of the combined company, will be governed by the amended certificate of incorporation and bylaws of the combined company. The rights associated with Velodyne common stock are different from the rights which will be associated with the common stock of the combined company. See the section entitled “Comparison of Stockholders’ Rights” of this joint proxy statement/prospectus for a discussion of these rights.

Ouster stockholders and Velodyne stockholders will each have reduced ownership and voting interest in the combined company as compared to ownership and voting interest in each of Ouster and Velodyne on a standalone basis.

Upon consummation of the first merger, each Ouster stockholder and each Velodyne stockholder will become a stockholder of the combined company with a percentage ownership of the combined company that is smaller than such stockholder’s percentage ownership of Ouster or Velodyne, as applicable, immediately prior to the first merger. As of the date of this joint proxy statement/prospectus, based on the exchange ratio and the estimated number of shares of common stock of Ouster and Velodyne that will be outstanding immediately prior to the completion of the first merger, including exercisable options, Ouster and Velodyne estimate that holders of shares of Ouster common stock as of immediately prior to the completion of the first merger will hold, in the aggregate, approximately 50% of the issued and outstanding shares of common stock of the combined company (based on fully diluted shares outstanding of the combined company including equity awards (using the treasury stock method)) immediately following the completion of the first merger, and holders of shares of Velodyne common stock as of immediately prior to the completion of the first merger will hold, in the aggregate, approximately 50% of the issued and outstanding shares of common stock of the combined company (based on fully diluted shares outstanding of the combined company including equity awards (using the treasury stock method)) immediately following the completion of the first merger. Because of this, each share of Ouster common stock and each share of Velodyne common stock will represent a smaller percentage ownership of the combined company than it represented in Ouster or Velodyne, respectively.

 

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Until the completion of the mergers or the termination of the merger agreement in accordance with its terms, Ouster and Velodyne are each prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to Ouster or Velodyne and their respective stockholders.

From and after the date of the merger agreement and prior to completion of the mergers, the merger agreement restricts Ouster and Velodyne from taking specified actions without the consent of the other party and requires that the business of each company and its respective subsidiaries be conducted in all material respects in the ordinary course of business consistent with past practice. These restrictions may prevent Ouster or Velodyne from making appropriate changes to their respective businesses or organizational structures or from pursuing attractive business opportunities that may arise prior to the completion of the mergers, and could have the effect of delaying or preventing other strategic transactions. Adverse effects arising from the pendency of the mergers could be exacerbated by any delays in consummation of the mergers or termination of the merger agreement. See the section entitled “The Merger Agreement—Conduct of Business Prior to the Effective Time” of this joint proxy statement/prospectus.

Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the mergers.

The success of the mergers will depend in part on the retention of personnel critical to the business and operations of the combined company due to, for example, their technical skills or management expertise. Current and prospective employees of Ouster and Velodyne may experience uncertainty about their future role with Ouster and Velodyne until strategies with regard to these employees’ roles in the combined company are announced or executed, which may impair Ouster’s and Velodyne’s ability to attract, retain and motivate key management, sales, marketing, technical and other personnel prior to and following the mergers. If Ouster and Velodyne are unable to retain personnel, including Ouster’s and Velodyne’s key management, who are critical to the successful integration and future operations of the companies, Ouster and Velodyne could face disruptions in their respective operations, loss of existing customers or loss of sales to existing customers, loss of key information, expertise or know-how, and unanticipated additional recruitment and training costs. In addition, the loss of key personnel could diminish the anticipated benefits of the mergers.

If key employees of Ouster or Velodyne depart, the integration of the companies may be more difficult and the combined company’s business following the mergers may be harmed. Furthermore, the combined company may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent relating to the business of each of Ouster or Velodyne, and the combined company’s ability to realize the anticipated benefits of the mergers may be adversely affected. In addition, there could be disruptions to or distractions for the workforce and management associated with activities of labor unions or integrating employees into the combined company. No assurance can be given that the combined company will be able to attract or retain key employees of Ouster and Velodyne to the same extent that those companies have been able to attract or retain their own employees in the past.

The mergers, and uncertainty regarding the mergers, may cause customers, suppliers or strategic partners to delay or defer decisions concerning Ouster and Velodyne and adversely affect each company’s ability to effectively manage their respective businesses.

The mergers will happen only if the stated conditions are met, including the relevant stockholder approvals, among other conditions. Many of the conditions are outside the control of Ouster and Velodyne, and both parties also have certain rights to terminate the merger agreement. Accordingly, there may be uncertainty regarding the completion of the mergers. This uncertainty may cause customers, suppliers, vendors, strategic partners or others that deal with Ouster or Velodyne to delay or defer entering into contracts with Ouster or Velodyne or making other decisions concerning Ouster or Velodyne or could cause such customers, suppliers, vendors, strategic partners or others to seek to change or cancel existing business relationships with Ouster or Velodyne, which could negatively affect their respective businesses. Any delay or deferral of those decisions or changes in

 

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existing agreements could have an adverse impact on the respective businesses of Ouster and Velodyne, regardless of whether the mergers are ultimately completed.

Whether or not the mergers are completed, the announcement and pendency of the mergers will divert significant management resources to complete the mergers, which could have an adverse effect on Ouster’s and Velodyne’s respective businesses, financial results, and/or market prices.

Whether or not the mergers are completed, the announcement and pendency of the mergers could cause disruptions in the businesses of Ouster and Velodyne by directing the attention of management of each of Ouster and Velodyne toward the completion of the mergers. Ouster and Velodyne have each diverted significant management resources in an effort to complete the mergers and are each subject to restrictions contained in the merger agreement on the conduct of their respective businesses in the period prior to the completion of the mergers. If the mergers are not completed, Ouster and Velodyne will have incurred significant costs, including the diversion of management resources, for which they will have received little or no benefit.

The directors and executive officers of Ouster and Velodyne have interests and arrangements that may be different from, or in addition to, those of Ouster and Velodyne stockholders generally.

When considering the recommendations of the boards of directors of Ouster or Velodyne, as applicable, with respect to the proposals described in this joint proxy statement/prospectus, stockholders should be aware that the directors and executive officers of each of Ouster and Velodyne have interests in the mergers that are different from, or in addition to, those of Ouster stockholders and Velodyne stockholders generally. These interests include the continued employment of certain executive officers of Ouster and Velodyne by the combined company, the continued service of certain directors of Ouster and Velodyne as directors of the combined company, the treatment in the mergers of outstanding equity, equity-based and incentive awards, severance arrangements, and other compensation and benefit arrangements, and the right to continued indemnification of former Ouster and Velodyne directors and officers by the combined company.

Ouster stockholders and Velodyne stockholders should be aware of these interests when they consider the recommendations of the respective Ouster and Velodyne boards of directors that they vote in favor of the Ouster share issuance proposal, in the case of Ouster, or that they adopt the merger agreement, in the case of Velodyne. The interests of Ouster’s directors and executive officers are described in more detail in the section entitled “Interests of Ouster’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus, and the interests of Velodyne’s directors and executive officers are described in more detail in the section entitled “Interests of Velodyne’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus.

Ouster or Velodyne may waive one or more of the closing conditions without re-soliciting stockholder approval.

Ouster or Velodyne may determine to waive, in whole or part, one or more of the conditions to its obligations to consummate the mergers. Ouster and Velodyne currently expect to evaluate the materiality of any waiver and its effect on Ouster and Velodyne stockholders, as applicable, in light of the facts and circumstances at the time to determine whether any amendment of this joint proxy statement/prospectus or any re-solicitation of proxies or voting cards is required in light of such waiver. Any determination whether to waive any condition to the mergers or as to re-soliciting stockholder approval or amending this joint proxy statement/prospectus as a result of a waiver will be made by Ouster and Velodyne, as applicable, at the time of such waiver based on the facts and circumstances as they exist at that time.

Each of Ouster and Velodyne will incur significant transaction, merger-related and restructuring costs in connection with the mergers.

Ouster and Velodyne have each incurred and expect to incur a number of non-recurring costs associated with combining the operations of the two companies, as well as transaction fees and other costs related to the

 

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mergers. These costs and expenses include fees paid to financial, legal and accounting advisors, facilities and systems consolidation costs, severance and other potential employment-related costs, including retention and severance payments that may be made to certain Ouster employees and Velodyne employees, filing fees, printing expenses and other related charges. Some of these costs are payable by Ouster or Velodyne regardless of whether the mergers are completed.

The combined company may also incur restructuring and integration costs in connection with the mergers. The costs related to restructuring will be expensed as a cost of the ongoing results of operations of either Ouster or Velodyne or the combined company. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the mergers and the integration of the two companies’ businesses. Although Ouster and Velodyne expect that the elimination of duplicative costs, strategic benefits, additional income and the realization of other efficiencies related to the integration of the businesses may offset incremental transaction, merger-related and restructuring costs over time, any net benefit may not be achieved in the near term or at all. While both Ouster and Velodyne have assumed that certain expenses would be incurred in connection with the mergers and the other transactions contemplated by the merger agreement, there are many factors beyond their control that could affect the total amount or the timing of the integration and implementation expenses.

Ouster stockholders and Velodyne stockholders will not be entitled to appraisal rights in the mergers.

Appraisal rights are statutory rights that, if applicable under law, enable stockholders of a corporation to dissent from an extraordinary transaction, such as a merger, and to demand that such corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to such stockholders in connection with the transaction. Under the DGCL, stockholders do not have appraisal rights if the shares of stock they hold are either listed on a national securities exchange or held of record by more than 2,000 holders. Notwithstanding the foregoing, appraisal rights are available if stockholders are required by the terms of the merger agreement to accept for their shares anything other than (a) shares of stock of the surviving corporation, (b) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than 2,000 holders, (c) cash in lieu of fractional shares or (d) any combination of the foregoing.

Because the mergers are of Merger Sub I with and into Velodyne and of Velodyne with and into Merger Sub II, and holders of Ouster common stock may continue to hold their shares following completion of the mergers, holders of Ouster common stock are not entitled to appraisal rights in the mergers.

Because shares of Ouster common stock are listed on the NYSE, a national securities exchange, and because Velodyne stockholders are not required by the terms of the merger agreement to accept for their shares anything other than shares of Ouster common stock and cash in lieu of fractional shares, holders of Velodyne common stock will not be entitled to appraisal rights in the mergers. See the section entitled “No Appraisal Rights” of this joint proxy statement/prospectus.

If the mergers, taken together, do not qualify as a “reorganization” under Section 368(a) of the Code, U.S. holders of Velodyne common stock may be required to pay additional U.S. federal income taxes.

For U.S. federal income tax purposes, the mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to the completion of the mergers that each of Ouster and Velodyne receive an opinion from its counsel to the effect that the mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Except where specifically discussed below, the discussion below assumes that the mergers will qualify for such tax treatment.

 

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Each such opinion will be based on customary assumptions and representations from Ouster and Velodyne, as well as certain warranties, covenants and undertakings by Ouster, Merger Sub I, Merger Sub II and Velodyne. If any such representations and assumptions or any other facts, representations, assumptions and exclusions set forth in such opinions is incorrect, incomplete or inaccurate, or is violated, the validity of the opinions described above may be affected and the tax consequences of the mergers could differ from those described in this joint proxy statement/prospectus.

See the section entitled “U.S. Federal Income Tax Consequences of the Mergers” of this joint proxy statement/prospectus for a more complete description of certain U.S. federal income tax consequences of the mergers. Please consult your tax advisors as to the specific tax consequences to you of the mergers.

Warrants and other shares underlying equity awards, could increase the number of shares eligible for future resale in the public market and result in dilution to the stockholders.

As of November 15, 2022, Ouster had outstanding publicly traded warrants exercisable for 15,999,900 shares of Ouster common stock at $11.50 per share, and Velodyne had (i) outstanding publicly traded warrants exercisable for 4,480,425 shares of common stock at $11.50 per share; and (ii) an outstanding private warrant owned by an affiliate of Amazon Inc., exercisable for up to 39,784,213 shares of common stock at $4.16 per share, 50% of which will vest at the effective time.

At the effective time, the Ouster Warrants will remain as the warrants exercisable for shares of Ouster common stock in accordance with the terms and conditions of the warrant agreements applicable to such Ouster Warrants. Each Velodyne Warrant will be converted into an Ouster Warrant with the same terms and conditions as applied to such Velodyne Warrant immediately prior to the effective time; however, such Ouster Warrant will cover a number of shares of Ouster common stock equal to the product of the number of shares of Velodyne common stock subject to the Velodyne Warrant and the exchange ratio and will have an exercise price per share equal to the amount obtained by dividing the per share exercise price of the Velodyne Warrant by the exchange ratio.

To the extent the trading price of Ouster common stock exceeds the applicable exercise price for the Ouster Warrants, the shares of Ouster common stock issued upon exercise of any of the Ouster Warrants will result in dilution to the then existing holders of Ouster common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of the Ouster common stock.

There can be no assurance that the Ouster Warrants outstanding after the mergers will be listed on the NYSE or other national exchange.

Ouster will use its reasonable best efforts to cause the Ouster Warrants to be issued in connection with the mergers in respect of Velodyne’s publicly traded warrants to be listed on the NYSE or other national exchange. However, such listing depends in part on the Ouster Warrants meeting the applicable exchange’s listing requirements. If the Ouster Warrants are not listed on a national exchange following the mergers, there would likely be a less liquid market for those securities.

Risks Relating to the Proposed Reverse Stock Split

The proposed reverse stock split may not increase Ouster’s stock price over the long-term.

One of the Ouster stockholder proposals is the Ouster reverse stock split proposal. The mergers are not conditioned on the adoption of this stockholder proposal. One of the purposes of the contemplated reverse stock split is to increase the per share market price of Ouster common stock in order to improve the status of Ouster common stock as an investment security and help ensure that Ouster complies with the continued listing

 

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requirements of the NYSE. It cannot be assured, however, that the contemplated reverse stock split, if effected, will accomplish these objectives for any meaningful period of time and that Ouster common stock will not be delisted from the NYSE in the future due to a failure to satisfy the NYSE’s minimum closing bid listing standard or other NYSE listing requirements. While it is expected that the reduction in the number of outstanding shares of Ouster common stock will proportionally increase the market price of Ouster common stock, it cannot be assured that the contemplated reverse stock split, if effected, will result in any permanent or sustained increase in the market price of Ouster common stock, which is dependent upon many factors, including the combined company’s business and financial performance, general market conditions and the combined company’s prospects for future success.

Failure to obtain approval of the Ouster reverse stock split proposal may increase the probability that Ouster common stock would be delisted from the NYSE in the future due to a failure to satisfy the NYSE’s minimum closing bid listing standard.

The proposed reverse stock split may decrease the liquidity of Ouster common stock.

Although the Ouster board of directors believes that the anticipated increase in the market price of Ouster common stock could encourage interest in Ouster common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the contemplated reverse stock split, if effected. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for Ouster common stock.

The proposed reverse stock split may lead to a decrease in Ouster’s overall market capitalization.

Should the market price of Ouster common stock decline after the contemplated reverse stock split, if effected, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the contemplated reverse stock split. The contemplated reverse stock split may be viewed negatively by the market and, consequently, may lead to a decrease in Ouster’s overall market capitalization. If the per share market price does not increase in proportion to the contemplated reverse stock split ratio, then the value of Ouster, as measured by its stock market capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of Ouster common stock will remain the same after the contemplated reverse stock split is effected, or that the contemplated reverse stock split will not have an adverse effect on the stock price of Ouster common stock due to the reduced number of shares outstanding after the contemplated reverse stock split.

Risks Relating to the Combined Company

Combining the businesses of Ouster and Velodyne may be more difficult, costly or time-consuming than expected, and the combined company may fail to realize the anticipated benefits of the mergers, which may adversely affect the combined company’s business results and negatively affect the value of the common stock of the combined company following the mergers.

The success of the mergers will depend on, among other things, the ability of Ouster and Velodyne to combine their businesses in a manner that realizes cost savings and facilitates growth opportunities.

Ouster and Velodyne must successfully combine their respective businesses in a manner that permits these benefits to be realized. For example, the combined company may not have sufficient capital on hand or generated from operations to continue funding operations as anticipated. In addition, the combined company must achieve the anticipated growth and cost savings without adversely affecting current revenues and investments in future growth. If the combined company is not able to successfully achieve these objectives, the anticipated benefits of the mergers may not be realized fully, or at all, or may take longer to realize than expected.

 

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An inability to realize the full extent of the anticipated benefits of the mergers and the other transactions contemplated by the merger agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of the combined company, which may adversely affect the value of the common stock of the combined company after the completion of the mergers.

In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. Actual growth and cost savings, if achieved, may be lower than what Ouster and Velodyne expect and may take longer to achieve than anticipated. If Ouster and Velodyne are not able to adequately address integration challenges, they may be unable to realize the anticipated benefits of the integration of the two companies.

The failure to successfully integrate the businesses and operations of Ouster and Velodyne in the expected time frame may adversely affect the combined company’s future results.

Ouster and Velodyne have operated and, until the completion of the mergers, will continue to operate independently. There can be no assurances that their businesses can be integrated successfully. It is possible that the integration process could result in the loss of key Ouster employees or key Velodyne employees, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in integrating the operations of Ouster and Velodyne in order to realize the anticipated benefits of the mergers so the combined company performs as expected:

 

   

combining the companies’ operations and corporate functions;

 

   

combining the businesses of Ouster and Velodyne and meeting the capital requirements of the combined company in a manner that permits the combined company to achieve any cost synergies and revenue growth of the combined company anticipated to result from the mergers, the failure of which would result in the anticipated benefits of the mergers not being realized in the time frame currently anticipated or at all;

 

   

integrating personnel from the two companies;

 

   

integrating and unifying the offerings and services available to customers;

 

   

harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

 

   

maintaining existing agreements with customers, distributors, providers and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers and vendors;

 

   

addressing possible differences in business backgrounds, corporate cultures and management philosophies;

 

   

consolidating the companies’ administrative and information technology infrastructure;

 

   

coordinating distribution and marketing efforts; and

 

   

coordinating geographically dispersed organizations.

In addition, at times the attention of certain members of either company’s or both companies’ management and resources may be focused on completion of the mergers and the integration of the businesses of the two companies and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt each company’s ongoing business and the business of the combined company.

 

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The combined company may not be able to retain customers or suppliers or customers or suppliers may seek to modify contractual obligations with the combined company, which could have an adverse effect on the combined company’s business and operations. Third parties may terminate or alter existing contracts or relationships with Ouster or Velodyne.

As a result of the mergers, the combined company may experience impacts on relationships with customers and suppliers that may harm the combined company’s business and results of operations. Certain customers, licensors, business partners or suppliers may seek to terminate or modify contractual obligations following the mergers whether or not contractual rights are triggered as a result of the mergers. There can be no guarantee that customers and suppliers will remain with or continue to have a relationship with the combined company or do so on the same or similar contractual terms following the mergers. If any customers or suppliers seek to terminate or modify contractual obligations or discontinue the relationship with the combined company, then the combined company’s business and results of operations may be harmed. Furthermore, the combined company will not have long-term arrangements with many of its significant suppliers. If the combined company’s suppliers were to seek to terminate or modify an arrangement with the combined company, then the combined company may be unable to procure necessary supplies from other suppliers in a timely and efficient manner and on acceptable terms, or at all. Any of the aforementioned disruptions could limit the combined company’s ability to achieve the anticipated benefits of the mergers. The adverse effect of any such disruptions could also be exacerbated by a delay in the completion of the mergers or by a termination of the merger agreement.

There can be no assurance that the combined company will be able to comply with the continued listing standards of the New York Stock Exchange.

If the combined company fails to satisfy the continued listing requirements of the NYSE, such as the corporate governance requirements or the minimum share price requirement, NYSE may take steps to delist the combined company’s securities. Such a delisting would likely have a negative effect on the price of the securities and would impair stockholders’ ability to sell or purchase the securities when they wish to do so. In the event of a delisting, the combined company can provide no assurance that any action taken by it to restore compliance with listing requirements would allow the securities to become listed again, stabilize the market price or improve the liquidity of the securities, prevent the securities from dropping below the NYSE minimum share price requirement or prevent future non-compliance with NYSE’s listing requirements. Additionally, if the securities are not listed on, or become delisted from the NYSE, for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of the securities may be more limited than if the combined company were quoted or listed on the NYSE or another national securities exchange. Stockholders may be unable to sell their securities unless a market can be established or sustained.

The combined company may be exposed to increased litigation, which could have an adverse effect on the combined company’s business and operations.

The combined company may be exposed to increased litigation from stockholders, customers, suppliers, consumers and other third parties due to the combination of Ouster’s business and Velodyne’s business following the mergers. Such litigation may have an adverse impact on the combined company’s business and results of operations or may cause disruptions to the combined company’s operations.

The unaudited pro forma condensed combined financial information and certain financial forecasts included in this joint proxy statement/prospectus may not be indicative of what the combined company’s actual financial position or results of operations would have been or will be.

The unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus is presented solely for illustrative purposes and is not necessarily indicative of what the combined company’s actual financial position or results of operations would have been had the mergers been completed on

 

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the dates indicated. This unaudited pro forma condensed combined financial information reflects adjustments that were developed using preliminary estimates based on available information and various assumptions, and may be revised as additional information becomes available. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this joint proxy statement/prospectus.

While presented with numeric specificity, the Ouster and Velodyne unaudited projected financial forecasts provided in this joint proxy statement/prospectus are based on numerous variables and assumptions (including, but not limited to, those related to industry performance and competition, general business, the lidar and related industries, and economic, market and financial conditions and additional matters specific to Ouster’s or Velodyne’s business, as applicable) that are inherently subjective and uncertain and are beyond the control of the respective management teams of Ouster and Velodyne. As a result, actual results may differ materially from the unaudited projected financial forecasts. Important factors that may affect actual results and cause these unaudited projected financial forecasts to not be achieved include, but are not limited to, risks and uncertainties relating to Ouster’s or Velodyne’s business, as applicable (including each company’s ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, general business and economic conditions. See “The Mergers—Certain Financial Forecasts Utilized in Connection with the Mergers"

The combined company may be unable to retain Ouster and Velodyne personnel successfully after the mergers are completed.

The success of the mergers will depend in part on the combined company’s ability to retain the talents and dedication of the professionals currently employed by Ouster and Velodyne. It is possible that these employees may decide not to remain with Ouster or Velodyne, as applicable, while the mergers are pending, or with the combined company after the mergers are consummated. If key employees terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating Ouster and Velodyne to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, Ouster and Velodyne may not be able to locate suitable replacements for any key employees that leave either company or to offer employment to potential replacements on reasonable terms.

Third parties may terminate or alter existing contracts or relationships with Ouster or Velodyne.

Velodyne has contracts with customers, suppliers, vendors, landlords, licensors and other business partners which may require Velodyne to obtain consent from these other parties in connection with the mergers. If these consents cannot be obtained, the combined company may suffer a loss of potential future revenue and may lose rights that are material to Velodyne’s business and the business of the combined company. In addition, third parties with whom Ouster or Velodyne currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the mergers. Any such disruptions could limit the combined company’s ability to achieve the anticipated benefits of the mergers. The adverse effect of such disruptions could also be exacerbated by a delay in the completion of the mergers or the termination of the merger agreement.

The combined company is subject to risks arising from the ongoing COVID-19 pandemic.

The ongoing COVID-19 pandemic has impacted each of Ouster’s and Velodyne’s businesses and Ouster and Velodyne expect it to continue to impact the combined company’s business. Governments and businesses have taken, and may continue to take, unprecedented measures in response to the COVID-19 pandemic. Such measures have included restrictions on travel and business operations, temporary closures of businesses, and quarantines and shelter-in-place orders. The COVID-19 pandemic has caused significant volatility and disruption in global financial markets.

The extent to which the COVID-19 pandemic will impact the combined company is highly uncertain and is difficult to predict. The pandemic’s effects and their extent will depend on various factors, including, but not

 

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limited to, the duration, scope and impact of the pandemic, restrictions on business and social distancing guidelines that may be requested or mandated by governmental authorities and how quickly and to what extent normal economic and operating conditions can resume. Relevant adverse consequences of the pandemic could include reduced liquidity, increased volatility of the combined company’s stock price, operational disruption or failure due to spread of disease within the combined company or due to restrictions on business and social distancing guidelines imposed or requested by governmental authorities, unavailability of raw materials, disruption in the supply chain and increased cybersecurity and fraud risks due to increased online and remote activity, as well as the adverse consequences of a macroeconomic slowdown, recession or depression.

Even after the COVID-19 pandemic has subsided, the combined company may continue to experience adverse impacts to its business as a result of the global economic impact of the COVID-19 pandemic, including reduced availability of credit, adverse impacts on liquidity and the negative financial effects from any recession or depression that may occur.

Risks Relating to Ouster’s Business

Ouster’s business will continue to be subject to the risks described in the sections entitled “Risk Factors” in Ouster’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, in Ouster’s Quarterly Report on Form 10-Q for the quarterly periods ended June 30, 2022 and September 30, 2022, and in other documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus for the location of information incorporated by reference into this joint proxy statement/prospectus.

Risks Relating to Velodyne’s Business

Velodyne’s business will continue to be subject to the risks described in the sections entitled “Risk Factors” in Velodyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, in Velodyne’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022 and in other documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus for the location of information incorporated by reference into this joint proxy statement/prospectus.

 

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THE PARTIES TO THE MERGER

Ouster, Inc.

350 Treat Avenue

San Francisco, California 94110

(415) 949-0108

Ouster is a leading provider of high-resolution digital lidar sensors that offer advanced 3D vision to machinery, vehicles, robots, and fixed infrastructure assets, allowing each to understand and visualize the surrounding world and ultimately enabling safe operation and ubiquitous autonomy. Ouster’s principal executive office is located at 350 Treat Avenue, San Francisco, CA 94110. Its telephone number is (415) 949-0108.

Ouster common stock is listed on the NYSE under the ticker symbol “OUST.”

For more information about Ouster, please visit Ouster’s website at https://ouster.com/. The information contained on Ouster’s website or accessible through it (other than the documents incorporated by reference herein) does not constitute a part of this joint proxy statement/prospectus or any other report or document on file with or furnished to the SEC. Additional information about Ouster is included in the documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus.

Oban Merger Sub, Inc.

350 Treat Avenue

San Francisco, California 94110

(415) 949-0108

Oban Merger Sub, Inc., a newly formed and a direct, wholly-owned subsidiary of Ouster, is a Delaware corporation that was formed on November 1, 2022, for the sole purpose of effecting the mergers. Under the merger agreement, Oban Merger Sub, Inc. will merge with and into Velodyne as of the effective time, and Velodyne will continue as the surviving corporation and a wholly-owned subsidiary of Ouster. Oban Merger Sub, Inc. will be renamed Velodyne Lidar, Inc. following the completion of the first merger.

Oban Merger Sub II LLC

350 Treat Avenue

San Francisco, California 94110

(415) 949-0108

Oban Merger Sub II LLC, a newly formed and a direct, wholly-owned subsidiary of Ouster, is a Delaware limited liability company that was formed on November 1, 2022, for the sole purpose of effecting the mergers. Under the merger agreement, Oban Merger Sub II LLC will merge with and into Velodyne as of the effective time of the second merger, and Oban Merger Sub II LLC will continue as the surviving entity and a wholly-owned subsidiary of Ouster. Oban Merger Sub II LLC will be renamed Velodyne, LLC following the completion of the mergers.

Velodyne Lidar, Inc.

5521 Hellyer Avenue

San Jose, California 95138

(669) 275-2251

 

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Velodyne ushered in a new era of autonomous technology with the invention of real-time surround view lidar sensors. Velodyne’s revolutionary sensor and software solutions provide flexibility, quality and performance to meet the needs of a wide range of industries, including robotics, industrial, intelligent infrastructure, autonomous vehicles and advanced driver assistance systems (ADAS). Through continuous innovation, Velodyne strives to transform lives and communities by advancing safer mobility for all. Velodyne’s principal executive offices are located at 5521 Hellyer Avenue, San Jose, California 95138 and its telephone number is (669) 275-2251.

Velodyne common stock is listed on the Nasdaq under the ticker symbol “VLDR.”

For more information about Velodyne, please visit Velodyne’s website at https://velodynelidar.com/. The information contained on Velodyne’s website or accessible through it (other than the documents incorporated by reference herein) does not constitute a part of this joint proxy statement/prospectus or any other report or document on file with or furnished to the Securities and Exchange Commission. Additional information about Velodyne is included in the documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus.

 

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THE OUSTER SPECIAL MEETING

This joint proxy statement/prospectus is being mailed on or about December 14, 2022 to holders of record of Ouster common stock as of the close of business on December 13, 2022 and constitutes notice of the Ouster special meeting in conformity with the requirements of the DGCL and the bylaws of Ouster, which are referred to as the Ouster bylaws.

This joint proxy statement/prospectus is being provided to Ouster stockholders as part of a solicitation of proxies by the Ouster board of directors for use at the Ouster special meeting and at any adjournments or postponements of the Ouster special meeting. Ouster stockholders are encouraged to read the entire document carefully, including the annexes to and documents incorporated by reference into this document, for more detailed information regarding the merger agreement and the transactions contemplated by the merger agreement.

Date, Time and Place of the Ouster Special Meeting

The Ouster special meeting is scheduled to be held completely virtually at the Ouster special meeting website, at www.virtualshareholdermeeting.com/OUST2023SM, on January 26, 2023, beginning at 9 a.m., Pacific Time, unless adjourned or postponed to a later date and/or time.

Matters to be Considered at the Ouster Special Meeting

The purposes of the Ouster special meeting are as follows, each as further described in this joint proxy statement/prospectus:

 

   

Ouster Proposal #1: Ouster Share Issuance Proposal. To consider and vote on the Ouster share issuance proposal;

 

   

Ouster Proposal #2: Ouster Reverse Stock Split Proposal. To consider and vote on the Ouster reverse stock split proposal; and

 

   

Ouster Proposal #3: Ouster Adjournment Proposal. To consider and vote on the Ouster adjournment proposal.

Recommendation of the Ouster Board of Directors

The Ouster board of directors unanimously recommends that Ouster stockholders vote:

 

   

Ouster Proposal #1:FOR” the Ouster share issuance proposal;

 

   

Ouster Proposal #2:FOR” the Ouster reverse stock split proposal; and

 

   

Ouster Proposal #3:FOR” the Ouster adjournment proposal.

After careful consideration, the Ouster board of directors (1) adopted and approved the merger agreement and the consummation of the transactions upon the terms and conditions set forth in the merger agreement, (2) determined that the terms of the merger agreement, the mergers and the other transactions are fair to, and in the best interests of, Ouster and its stockholders, (3) directed that the Ouster share issuance proposal be submitted to the stockholders of Ouster for adoption, (4) recommended that the stockholders of Ouster approve the Ouster share issuance proposal and (5) declared that the Ouster share issuance proposal is advisable.

See also the section entitled “The Mergers—Recommendation of the Ouster Board of Directors; Ouster’s Reasons for the Mergers” of this joint proxy statement/prospectus.

 

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Record Date for the Ouster Special Meeting and Voting Rights

The record date to determine who is entitled to receive notice of and to vote at the Ouster special meeting is December 13, 2022. As of the close of business on November 30, 2022, there were 184,952,952 shares of Ouster common stock issued and outstanding, each entitled to vote at the Ouster special meeting. Each Ouster stockholder will have one vote for any matter properly brought before the Ouster special meeting for each share of Ouster common stock such holder held at the close of business on the Ouster record date. Only Ouster stockholders of record at the close of business on the Ouster record date are entitled to receive notice of and to vote at the Ouster special meeting.

Quorum; Abstentions and Broker Non-Votes

A quorum of stockholders is necessary to conduct the Ouster special meeting. The holders of a majority in voting power of the shares of Ouster common stock issued and outstanding and entitled to vote at the meeting must be represented at the Ouster special meeting electronically or by proxy in order to constitute a quorum. Abstentions will be counted for purposes of determining whether a quorum exists. If a quorum is not present, the Ouster special meeting will be adjourned until the holders of the number of shares of Ouster common stock required to constitute a quorum attend, whether electronically or by proxy.

Under NYSE rules, banks, brokers or other nominees who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers or other nominees are not allowed to exercise their voting discretion with respect to the approval of matters that NYSE determines to be “non-routine.” Generally, a broker non-vote occurs on an item when (a) a bank, broker or other nominee has discretionary authority to vote on one or more “routine” proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other “non-routine” proposals without instructions from the beneficial owner of the shares and (b) the beneficial owner fails to provide the bank, broker or other nominee with such instructions. Under NYSE rules, “non-routine” matters include the Ouster share issuance proposal (Ouster Proposal #1) and the Ouster adjournment proposal (Ouster Proposal #3). With respect to the Ouster share issuance proposal (Ouster Proposal #1) and the Ouster adjournment proposal (Ouster Proposal #3), if you hold your shares of Ouster common stock in “street name,” your shares will not be voted on any matter unless you affirmatively instruct your bank, broker or other nominee how to vote your shares in one of the ways indicated by your bank, broker or other nominee. It is therefore critical that you cast your vote by instructing your bank, broker or other nominee on how to vote. The NYSE rules governing brokers’ discretionary authority will not permit brokers to exercise discretionary authority regarding the Ouster share issuance proposal or the Ouster adjournment proposal, to be voted on at the Ouster special meeting. These NYSE rules are applicable to the votes to be held at the Ouster special meeting since Ouster common stock is currently listed on the NYSE.

Under NYSE rules, the Ouster reverse stock split proposal (Ouster Proposal #2) is a routine matter for which brokers are expected to have discretionary authority to vote. Ouster does not expect any broker non-votes in connection with Ouster Proposal #2.

If you submit a properly executed proxy card, even if you abstain from voting or vote against the adoption of the Ouster share issuance proposal, the Ouster reverse stock split proposal or the Ouster adjournment proposal, your shares of Ouster common stock will be counted for purposes of calculating whether a quorum is present at the Ouster special meeting. Executed but unvoted proxies will be voted in accordance with the recommendations of the Ouster board of directors. If additional votes must be solicited to adopt the Ouster share issuance proposal and the Ouster reverse stock split proposal, it is expected that the meeting will be adjourned to solicit additional proxies.

 

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Required Votes; Vote of Ouster’s Directors and Executive Officers

 

Proposal

  

Votes Necessary

Ouster Proposal #1    Ouster share issuance proposal   

Assuming the presence of a quorum, approval requires the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) at the Ouster special meeting on the Ouster share issuance proposal.

 

An abstention, a broker non-vote or other failure to vote will have no effect on the outcome of the Ouster share issuance proposal.

Ouster Proposal #2    Ouster reverse stock split proposal   

Assuming the presence of a quorum, approval requires the affirmative vote of the holders of a majority of the outstanding shares of Ouster common stock entitled to vote at the Ouster special meeting on the Ouster reverse stock split proposal.

 

An abstention or other failure to vote will have the same effect as a vote “AGAINST” the Ouster reverse stock split proposal. Ouster does not anticipate any broker non-votes in connection with this proposal.

Ouster Proposal #3    Ouster adjournment proposal   

If there is a quorum present, approval of the Ouster adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) at the Ouster special meeting on the Ouster adjournment proposal. In that case, an abstention, a broker non-vote or the failure of an Ouster stockholder not present at the meeting to vote will have no effect on the outcome of the Ouster adjournment proposal.

 

If a quorum is not present, then either (i) the person presiding over the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, or represented by proxy, shall have power to adjourn the Ouster special meeting. Accordingly, in the case of (ii), an Ouster stockholder’s abstention from voting, a broker non-vote or the failure of an Ouster stockholder not present at the meeting to vote will have the same effect as a vote “AGAINST” the Ouster adjournment proposal.

As of November 30, 2022, Ouster directors and executive officers, and their affiliates, as a group, owned and were entitled to vote 24,156,632 shares of Ouster common stock, or approximately 12.31% of the total outstanding shares of Ouster common stock as of such date. The directors and executive officers of Ouster, and their affiliates, have entered into voting and support agreements obligating them to vote their shares “FOR” the Ouster share issuance proposal, “FOR” the Ouster reverse stock split proposal and “FOR” the Ouster adjournment proposal. See also the section entitled “Interests of Ouster’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus and the arrangements described in Part III of Ouster’s Annual Report on Form 10-K for the fiscal year ended on December 31, 2021, as well as the information specifically incorporated by reference in Part III of Ouster’s Annual Report on Form 10-K for the fiscal year ended on December 31, 2021, from Ouster’s Definitive Proxy Statement on Schedule 14A for Ouster’s 2022 annual meeting filed with the SEC on April 27, 2022, which information is incorporated into this joint proxy statement/prospectus by reference.

 

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Methods of Voting

If you are a stockholder of record as of the record date for the Ouster special meeting, you may vote by proxy through the Internet, by telephone, or by mail, or by voting electronically at the Ouster special meeting. For shares held through a bank, broker or other nominee in “street name” instead of as a registered holder, you may vote by submitting your voting instructions to your bank, broker or other nominee. In most instances, you will be able to do this over the Internet, by telephone or by mail as indicated below. Please refer to the information from your bank, broker or other nominee on how to submit voting instructions. If you do not provide voting instructions to your bank, broker or other nominee, your shares of Ouster common stock will not be voted on the Ouster share issuance proposal or the Ouster adjournment proposal as your bank, broker or other nominee does not have discretionary authority to vote on such proposals at the Ouster special meeting; see the section entitled “—Quorum; Abstentions and Broker Non-Votes” of this joint proxy statement/prospectus.

 

   

By Internet: If you are a stockholder of record, you can submit a proxy to vote at www.proxyvote.com and follow the instructions, 24 hours a day, seven days a week. You will need the control number included on your proxy card or your paper voting instruction form (if you received a paper copy of the proxy materials).

 

   

By Telephone: If you are a stockholder of record, you can submit a proxy to vote using a touch-tone telephone by calling 1-800-690-6903 and follow the recorded instructions, 24 hours a day, seven days a week. You will need the control number included on your proxy card or your paper voting instruction form (if you received a paper copy of the proxy materials).

 

   

By Mail: If you have received a paper copy of the proxy materials by mail, you may complete, sign, date and return by mail the paper proxy card or voting instruction form sent to you in the envelope provided to you with your proxy materials or voting instruction form.

 

   

Electronically During the Meeting: All stockholders of record as of the record date may vote electronically at the Ouster special meeting throughout the duration of the meeting by logging into the meeting as a shareholder and clicking the “Vote Here” button. You will need the 16-digit control number included with your proxy materials. For more information on how to attend electronically, see the section entitled “—Attending the Ouster Special Meeting” of this joint proxy statement/prospectus.

If you are a stockholder of record, proxies submitted over the Internet, by telephone or by mail as described above should be received by 11:59 p.m., Eastern Time, on January 25, 2023. To reduce administrative costs and help the environment by conserving natural resources, Ouster asks that you submit a proxy to vote through the Internet, which is available 24 hours a day.

Notwithstanding the above, if your shares are held in “street name” by a bank, broker or other nominee, you should follow the instructions you receive from your bank, broker or other nominee on how to vote your shares. Registered stockholders who attend the Ouster special meeting may vote their shares electronically even if they previously have voted their shares.

If you deliver a proxy pursuant to this joint proxy statement/prospectus, but do not specify a choice with respect to any proposal set forth in this joint proxy statement/prospectus, your underlying shares of Ouster common stock will be voted on such uninstructed proposal in accordance with the recommendation of the Ouster board of directors. No matters other than the proposals listed above will be brought before the Ouster special meeting and the Ouster bylaws provide that the only business that may be conducted at the Ouster special meeting are those proposals brought before the meeting pursuant to this joint proxy statement/prospectus.

 

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Revocability of Proxies

Any stockholder giving a proxy has the right to revoke it before the proxy is voted at the Ouster special meeting by:

 

   

delivering a written notice of revocation or a duly executed proxy bearing a later date prior to the Ouster special meeting, which should be delivered to the Secretary of Ouster at Ouster’s principal executive offices, if you voted by mail;

 

   

submitting a timely and valid later proxy to vote online at www.proxyvote.com;

 

   

calling 1-800-690-6903 and following the recorded instructions; or

 

   

attending the Ouster special meeting and voting electronically.

Execution or revocation of a proxy will not in any way affect the stockholder’s right to attend the special meeting and vote electronically.

Written notices of revocation and other communications with respect to the revocation of proxies should be addressed to:

Ouster, Inc.

Attn: Corporate Secretary

350 Treat Ave

San Francisco, CA 94110

If your shares are held in “street name” and you previously provided voting instructions to your broker, bank or other nominee, you should follow the instructions provided by your broker, bank or other nominee to revoke or change your voting instructions.

Proxy Solicitation Costs

Ouster is soliciting proxies to provide an opportunity to all Ouster stockholders to vote on agenda items, whether or not the stockholders are able to attend the Ouster special meeting or an adjournment or postponement thereof. Ouster will bear the entire cost of soliciting proxies from its stockholders, except that Ouster and Velodyne have agreed to each pay one half of the costs and expenses of filing, printing and mailing this joint proxy statement/prospectus and all filing and other similar fees payable to the SEC in connection with this joint proxy statement/prospectus. In addition to the solicitation of proxies by mail, Ouster will ask banks, brokers and other custodians, nominees and fiduciaries to forward the proxy solicitation materials to the beneficial owners of shares of Ouster common stock held of record by such nominee holders. Ouster may be required to reimburse these nominee holders for their customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to the beneficial owners.

Ouster has retained MacKenzie Partners, Inc., referred to as MacKenzie Partners, to assist in the solicitation process. Ouster estimates that it will pay MacKenzie Partners a fee of approximately $10,000, plus reimbursement of reasonable expenses. Ouster also has agreed to indemnify MacKenzie Partners against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions). Proxies may be solicited on behalf of Ouster or by Ouster directors, officers and other employees in person, by mail, by telephone, by facsimile, by messenger, via the Internet or by other means of communication, including electronic communication. Directors, officers and employees of Ouster will not be paid any additional amounts for their services or solicitation in this regard.

 

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Attending the Ouster Special Meeting

You are entitled to attend the Ouster special meeting only if you are a stockholder of record of Ouster at the close of business on December 13, 2022 (the record date for the Ouster special meeting) or you hold your shares of Ouster beneficially in the name of a broker, bank or other nominee as of the Ouster record date, or you hold a valid proxy for the Ouster special meeting.

To participate in the Ouster special meeting, you will need the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials. The meeting webcast will begin promptly at 9 a.m., Pacific Time. We encourage you to access the meeting prior to the start time. Online check-in will begin at 8:45 a.m., Pacific Time, and you should allow ample time for check-in procedures. If you hold your shares through a bank or broker, instructions should also be provided on the voting instruction card provided by your bank or brokerage firm. If you lose your 16-digit control number, you may join the Ouster special meeting as a “Guest,” but you will not be able to vote, ask questions, or access the list of stockholders as of the record date.

If you plan to attend the Ouster special meeting and vote electronically, Ouster still encourages you to submit a proxy to vote in advance by the Internet, by telephone or (if you received a paper copy of the proxy materials) by mail so that your vote will be counted even if you later decide not to attend the Ouster special meeting. Submitting your proxy by the Internet, by telephone or by mail will not limit your right to vote at the Ouster special meeting if you later decide to attend electronically.

Householding

The SEC’s rules permit us to deliver a single set of proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one set of proxy materials to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate set of proxy materials, as requested, to any stockholder at the shared address to which a single set of those documents was delivered. If you prefer to receive separate copies of the proxy materials, contact MacKenzie Partners, Inc. at (800) 322-2885 or in writing at MacKenzie Partners, Inc., Householding Department, 1407 Broadway, 27th Floor, New York, New York 10018.

If you are currently a stockholder sharing an address with another stockholder and wish to receive only one set of future proxy materials for your household, please contact MacKenzie Partners, Inc. at the above phone number or address.

Tabulation of Votes

The Ouster board of directors will appoint an independent inspector of election for the Ouster special meeting. The inspector of election will, among other matters, determine the number of shares of Ouster common stock represented electronically or by proxy at the Ouster special meeting to confirm the existence of a quorum, determine the validity of all proxies and ballots and certify the results of voting on all proposals submitted to Ouster stockholders.

Adjournments

If a quorum is present at the Ouster special meeting but there are not sufficient votes at the time of the Ouster special meeting to approve the Ouster share issuance proposal, or, if additional time is necessary to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Ouster stockholders, then Ouster stockholders may be asked to vote on the Ouster adjournment proposal.

At any subsequent reconvening of the Ouster special meeting at which a quorum is present, any business may be transacted that might have been transacted at the original meeting and all proxies will be voted in the

 

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same manner as they would have been voted at the original convening of the Ouster special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

Assistance

If you need assistance voting or in completing your proxy card or have questions regarding the Ouster special meeting or the mergers, please contact MacKenzie Partners, Inc., the proxy solicitation agent for Ouster:

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor

New York, New York 10018

(212) 929 5500 (Call Collect)

Call Toll Free: (800) 322 2885

proxy@mackenziepartners.com

OUSTER STOCKHOLDERS SHOULD CAREFULLY READ THIS JOINT PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY FOR MORE DETAILED INFORMATION CONCERNING THE MERGER AGREEMENT AND THE MERGERS. IN PARTICULAR, OUSTER STOCKHOLDERS ARE DIRECTED TO THE MERGER AGREEMENT, WHICH IS ATTACHED AS ANNEX A HERETO.

 

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OUSTER PROPOSAL #1: OUSTER SHARE ISSUANCE PROPOSAL

This joint proxy statement/prospectus is being furnished to you as a stockholder of Ouster as part of the solicitation of proxies by the Ouster board of directors for use at the Ouster special meeting to consider and vote upon a proposal to approve the issuance of shares of Ouster common stock in the mergers pursuant to the merger agreement, which is attached as Annex A to this joint proxy statement/prospectus.

The Ouster board of directors, after due and careful discussion and consideration, adopted and approved the merger agreement and the consummation of the transactions upon the terms and conditions set forth in the merger agreement, including the issuance of Ouster common stock, and determined that the terms of the merger agreement, the mergers and the other transactions, including the issuance of Ouster common stock, are fair to, and in the best interests of, Ouster and its stockholders.

It is a condition to the completion of the mergers that Ouster stockholders approve the issuance of shares of Ouster common stock (including all securities convertible into or exercisable for shares of Ouster common stock) in the mergers. In the mergers, each Velodyne stockholder will receive, for each eligible share of Velodyne common stock that is issued and outstanding as of immediately prior to the effective time of the mergers, the merger consideration of 0.8204 shares of Ouster common stock, further described in the sections entitled “The Mergers—Exchange Ratio” and “The Merger Agreement—Merger Consideration.

Under NYSE rules, a company is required to obtain stockholder approval prior to the issuance of shares of common stock if the number of shares of common stock to be issued is, or will be upon issuance, equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the shares of common stock. If the mergers are completed pursuant to the merger agreement, Ouster expects to issue up to approximately 211,939,656 shares of Ouster common stock in connection with the mergers based on the number of shares of Velodyne common stock outstanding as of December 2, 2022 at the closing of the mergers. Additionally, following the closing of the mergers and in accordance with the terms of the merger agreement, Ouster may issue additional shares of Ouster common stock in connection with Velodyne’s outstanding warrants and equity awards that will be assumed by Ouster as a result of the mergers. Accordingly, the aggregate number of shares of Ouster common stock that Ouster will issue as a result of the mergers will exceed 20% of the shares of Ouster common stock outstanding before such issuance, and for this reason, Ouster is seeking the approval of Ouster stockholders for the issuance of shares of Ouster common stock pursuant to the merger agreement. In the event the Ouster share issuance proposal is not approved by Ouster stockholders, the mergers will not be completed.

In the event the Ouster share issuance proposal is approved by Ouster stockholders, but the merger agreement is terminated (without the mergers being completed) prior to the issuance of shares of Ouster common stock pursuant to the merger agreement, Ouster will not issue any shares of Ouster common stock as a result of the approval of the Ouster share issuance proposal.

The Ouster board of directors accordingly unanimously recommends that Ouster stockholders approve the Ouster share issuance proposal.

Assuming a quorum is present at the Ouster special meeting, approval of the Ouster share issuance proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) at the Ouster special meeting on the Ouster share issuance proposal. An abstention, a broker non-vote or the failure of an Ouster stockholder not present at the meeting to vote will have no effect on the outcome of the Ouster share issuance proposal.

IF YOU ARE AN OUSTER STOCKHOLDER, THE OUSTER BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE SHARE ISSUANCE PROPOSAL (OUSTER PROPOSAL #1)

 

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OUSTER PROPOSAL #2: OUSTER REVERSE STOCK SPLIT PROPOSAL

In accordance with the merger agreement, Ouster is seeking to approve and adopt a series of six amendments to the Ouster charter to allow Ouster to have the option to effect, separate from and following the closing of the mergers, (a) a reverse stock split of Ouster common stock at one of six reverse stock split ratios, one-for-five, one-for-six, one-for-seven, one-for-eight, one-for-nine and one-for-ten, with an exact ratio to be determined by the board of the combined company following the closing, and (b) if and when the reverse stock split is effected, a corresponding reduction in the number of authorized shares of Ouster common stock by the selected reverse stock split ratio. These ratios and reductions are shown in Amendments A, B, C, D, E and F, respectively, to the proposed form of certificate of amendment that is attached as Annex B to this proxy statement/prospectus. Upon the effectiveness of an amendment to the Ouster charter, the Ouster board of directors may, upon mutual agreement with the Velodyne board of directors, separate from and following the closing of the mergers, effect a reverse stock split and authorized share reduction, pursuant to which the issued shares of Ouster common stock immediately prior to the effective time of the reverse stock split will be reclassified into a smaller number of shares, such that a holder of Ouster common stock will own one new share of Ouster common stock for the specified number of shares of issued common stock held by that stockholder immediately prior to the effective time of the reverse stock split.

If the Ouster stockholders approve this proposal and the mergers are consummated, the board of the combined company will determine the reverse stock split ratio following the closing from among the proposed ratios and cause a certificate of amendment to the Ouster charter setting forth the amendment with the selected ratio to be filed with the Delaware Secretary of State to effect the reverse stock split and the reduction in authorized shares only if the board of the combined company following the closing determines that the reverse stock split and the reduction in authorized shares would be in the best interests of the combined company and its stockholders. The board of the combined company will abandon the amendments with the other reverse stock split ratios. No fractional shares of Ouster common stock will be issued as a result of the reverse stock split; instead, any fractional shares resulting from the reverse stock split will be rounded up to the nearest whole share.

Approval of the Ouster reverse stock split proposal is not a condition to the consummation of the mergers, and if the conditions to the mergers are satisfied, the mergers will close whether or not the Ouster reverse stock split proposal is approved.

In addition, approval of the Ouster reverse stock split proposal is not conditioned upon approval of the Ouster share issuance proposal and is not conditioned on completion of the mergers. As a result, if the Ouster stockholders vote to approve the Ouster reverse stock split proposal, and if the merger agreement is terminated, the Ouster board of directors, in its discretion, may elect to effect the reverse stock split and corresponding reduction to the number of authorized shares of Ouster common stock. The purpose of the amendment to the Ouster charter allowing Ouster to have the option to effect a reverse stock split in certain circumstances is to provide the Ouster board of directors with the flexibility to effect such a reverse stock split, whether or not the mergers are consummated. Even if the Ouster reverse stock split proposal is approved by Ouster stockholders, the board of the combined company or the Ouster board, as applicable, may delay or abandon the reverse stock split at any time prior to the effective time of the reverse stock split if the board determines that the reverse stock split is no longer in the best interests of the company or its stockholders.

The Ouster board of directors, after due and careful discussion and consideration, approved and declared advisable the Ouster reverse stock split proposal, on the terms and conditions set forth in the form of proposed amendment attached as Annex B to this joint proxy statement/prospectus, and determined that the Ouster reverse stock split proposal is fair to and in the best interests of Ouster and its stockholders and approved that the Ouster reverse stock split proposal be submitted to the Ouster stockholders for approval. The Ouster board of directors approved the proposal to amend the Ouster charter to effect the reverse stock split for the following reasons:

 

   

the Ouster board of directors believes a higher stock price that may result from the reverse stock split may help generate investor interest in Ouster and help Ouster attract and retain employees;

 

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if the reverse stock split successfully increases the per share price of Ouster common stock, the Ouster board of directors believes such increase may increase trading volume in Ouster common stock; and

 

   

the Ouster board of directors believes that effecting the reverse stock split may be an effective means of avoiding any potential delisting of Ouster common stock from the NYSE.

The Ouster board of directors accordingly unanimously recommends that Ouster stockholders approve the Ouster reverse stock split proposal.

Assuming a quorum is present at the Ouster special meeting, the approval of the Ouster reverse stock split proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Ouster common stock entitled to vote at the Ouster special meeting on the Ouster reverse stock split proposal. Accordingly, an

Ouster stockholder’s abstention from voting or the failure of an Ouster stockholder not present at the meeting to vote will have the same effect as a vote “AGAINST” the Ouster reverse stock split proposal. We do not expect any broker non-votes in connection with the Ouster reverse stock split proposal.

IF YOU ARE AN OUSTER STOCKHOLDER, THE OUSTER BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE OUSTER REVERSE STOCK SPLIT PROPOSAL (OUSTER PROPOSAL #2)

 

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U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT

The following discussion is a summary of the U.S. federal income tax consequences of a reverse stock split to Ouster U.S. Holders (as defined below). This discussion is based on the Code, U.S. Treasury regulations promulgated thereunder, judicial decisions and published rulings and administrative pronouncements of the IRS, in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could affect the accuracy of the statements and conclusions set forth in this discussion and could adversely affect an Ouster U.S. Holder. This discussion is not a complete description of all of the tax consequences of the reverse stock split and, in particular, does not address any tax consequences arising under the Medicare contribution tax on net investment income, the special tax accounting rules under Section 451(b) of the Code, the consequences that may arise under the Foreign Account Tax Compliance Act (including the U.S. Treasury regulations proposed or promulgated thereunder and any intergovernmental agreements entered into pursuant thereto or in connection therewith) or the alternative minimum tax, nor does it address any tax consequences arising under the laws of any state, local or non-U.S. jurisdiction, or under any U.S. federal laws other than those pertaining to the income tax (such as estate, gift or other non-income tax consequences).

This discussion applies only to Ouster U.S. Holders who hold shares of Ouster common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not purport to address all aspects of U.S. federal income taxation that may be relevant to Ouster U.S. Holders in light of their particular circumstances and does not apply to Ouster U.S. Holders subject to special treatment under the U.S. federal income tax laws including, without limitation:

 

   

banks or other financial institutions;

 

   

partnerships, S corporations and other pass-through entities (and investors in partnerships, S corporations and other pass-through entities);

 

   

insurance companies;

 

   

tax-exempt organizations or governmental organizations;

 

   

dealers or brokers in securities or currencies;

 

   

traders in securities that elect to use a mark-to-market method of accounting;

 

   

persons that immediately before the reverse stock split actually or constructively owned at least five percent of Ouster common stock (by vote or value);

 

   

regulated investment companies;

 

   

real estate investment trusts;

 

   

tax-qualified retirement plans;

 

   

persons that hold Ouster common stock as part of a straddle, hedge, constructive sale or conversion transaction;

 

   

individuals who are U.S. expatriates and former citizens or long-term residents of the United States;

 

   

holders who acquired their shares of Ouster common stock through the exercise of an employee stock option, in connection with a restricted stock unit or otherwise as compensation; and

 

   

persons that have a “functional currency” other than the U.S. dollar.

The following discussion does not address the tax consequences of any transactions effectuated before, after or at the same time as the reverse stock split, whether or not they are in connection with the reverse stock split, including, without limitation, the tax consequences to holders of options, warrants or similar rights to purchase shares of Ouster common stock.

 

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For purposes of this discussion, the term “Ouster U.S. Holder” means a beneficial owner of Ouster common stock that is, for U.S. federal income tax purposes:

 

   

an individual citizen or resident of the United States;

 

   

a corporation, or entity treated as a corporation for U.S. federal income tax purposes, organized under the laws of the United States, any state thereof or the District of Columbia;

 

   

a trust that (i) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person for U.S. federal income tax purposes; or

 

   

an estate, the income of which is subject to U.S. federal income tax regardless of its source.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Ouster common stock, the tax treatment of a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. Any entity treated as a partnership for U.S. federal income tax purposes that holds Ouster common stock and any partners in such partnership should consult their tax advisors regarding the tax consequences of the reverse stock split to them.

No rulings have been, or will be, sought by Ouster from the IRS with respect to the reverse stock split, and there can be no assurance that the IRS or a court will not take a contrary position regarding the tax consequences described in this joint proxy statement/prospectus. The actual tax consequences of the reverse stock split to you may be complex and will depend on your specific situation and on factors that are not within the control of Ouster.

THE FOLLOWING DISCUSSION DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR DISCUSSION OF ALL OF THE POTENTIAL TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT. ALL HOLDERS OF OUSTER COMMON STOCK SHOULD CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE REVERSE STOCK SPLIT, INCLUDING THE APPLICABILITY AND EFFECT OF ANY U.S. FEDERAL, STATE, LOCAL, NON-U.S. INCOME AND OTHER TAX LAWS.

The reverse stock split is intended to constitute a “recapitalization” for U.S. federal income tax purposes. Assuming the reverse stock split so qualifies, an Ouster U.S. Holder generally should not recognize gain or loss as a result of the reverse stock split. An Ouster U.S. Holder’s aggregate basis in the shares of Ouster common stock received pursuant to the reverse stock split should equal such holder’s aggregate tax basis in the shares of Ouster common stock surrendered, and such holder’s holding period in the shares of Ouster common stock received should include the holding period of the shares of Ouster common stock surrendered. U.S. Treasury regulations promulgated under the Code provide detailed rules for allocating the tax basis and holding period of shares of Ouster common stock surrendered pursuant to the reverse stock split to the shares of Ouster common stock received pursuant to the reverse stock split. Ouster U.S. Holders holding shares of Ouster common stock that were acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares of Ouster common stock.

 

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OUSTER PROPOSAL #3: OUSTER ADJOURNMENT PROPOSAL

The Ouster special meeting may be adjourned to another time and place if necessary to permit solicitation of additional proxies if there are not sufficient votes to approve the Ouster share issuance proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Ouster stockholders.

Ouster is asking its stockholders to authorize the holder of any proxy solicited by the Ouster board of directors to vote in favor of any adjournment to the Ouster special meeting to solicit additional proxies if there are not sufficient votes to approve the Ouster share issuance proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Ouster stockholders.

The Ouster board of directors unanimously recommends that Ouster stockholders approve the proposal to adjourn the Ouster special meeting, if necessary.

If there is a quorum present, approval of the Ouster adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) at the Ouster special meeting on the Ouster adjournment proposal. In that case, an abstention, a broker non-vote or the failure of an Ouster stockholder not present at the meeting to vote will have no effect on the outcome of the Ouster adjournment proposal.

If a quorum is not present, then either (i) the person presiding over the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, or represented by proxy, shall have power to adjourn the Ouster special meeting. Accordingly, in the case of (ii), an Ouster stockholder’s abstention from voting, a broker non-vote or the failure of an Ouster stockholder not present at the meeting to vote will have the same effect as a vote “AGAINST” the Ouster adjournment proposal.

IF YOU ARE AN OUSTER STOCKHOLDER, THE OUSTER BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE OUSTER ADJOURNMENT PROPOSAL (OUSTER PROPOSAL #3)

 

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THE VELODYNE SPECIAL MEETING

This joint proxy statement/prospectus is being mailed on or about December 9, 2022 to holders of record of Velodyne common stock as of the close of business on December 5, 2022 and constitutes notice of the Velodyne special meeting in conformity with the requirements of the DGCL and the bylaws of Velodyne, which are referred to as the Velodyne bylaws.

This joint proxy statement/prospectus is being provided to Velodyne stockholders as part of a solicitation of proxies by the Velodyne board of directors for use at the Velodyne special meeting and at any adjournments or postponements of the Velodyne special meeting. Velodyne stockholders are encouraged to read the entire document carefully, including the annexes to and documents incorporated by reference into this document, for more detailed information regarding the merger agreement and the transactions contemplated by the merger agreement.

Date, Time and Place of the Velodyne Special Meeting

The Velodyne special meeting is scheduled to be held at 5521 Hellyer Avenue, San Jose, CA 95138, on January 26, 2023, beginning at 9 a.m., Pacific Time, unless adjourned or postponed to a later date and/or time.

Matters to be Considered at the Velodyne Special Meeting

The purposes of the Velodyne special meeting are as follows, each as further described in this joint proxy statement/prospectus:

 

   

Velodyne Proposal #1: Adoption of the Merger Agreement. To consider and vote on the merger agreement proposal;

 

   

Velodyne Proposal #2: Velodyne Compensation Proposal. To consider and vote on the merger-related compensation proposal; and

 

   

Velodyne Proposal #3: Adjournment of the Velodyne Special Meeting. To adjourn the Velodyne special meeting to a later date or dates, if necessary or appropriate, to allow time to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the Velodyne special meeting.

Recommendation of the Velodyne Board of Directors

The Velodyne board of directors unanimously recommends that Velodyne stockholders vote:

 

   

Velodyne Proposal #1:FOR” the merger agreement proposal;

 

   

Velodyne Proposal #2:FOR” the compensation proposal; and

 

   

Velodyne Proposal #3:FOR” the Velodyne adjournment proposal.

After careful consideration, the Velodyne board of directors unanimously (1) determined that the merger agreement, the mergers and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, Velodyne and its stockholders; (2) approved and declared advisable the merger agreement, the mergers and the other transactions contemplated by the merger agreement; (3) directed that the merger agreement be submitted for approval and adoption at a meeting of Velodyne stockholders; and (4) resolved to recommend that Velodyne stockholders vote in favor of the adoption of the Velodyne merger agreement proposal.

See also the section entitled “The Mergers—Recommendation of the Velodyne Board of Directors; Velodyne’s Reasons for the Mergers” of this joint proxy statement/prospectus.

 

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Record Date for the Velodyne Special Meeting and Voting Rights

The record date to determine who is entitled to receive notice of and to vote at the Velodyne special meeting is December 5, 2022. As of the close of business on the Velodyne record date, there were 238,281,867 shares of Velodyne common stock issued and outstanding, each entitled to vote at the Velodyne special meeting. Each Velodyne stockholder will have one vote for any matter properly brought before the Velodyne special meeting for each share of Velodyne common stock such holder held at the close of business on the Velodyne record date. Only Velodyne stockholders of record at the close of business on the Velodyne record date are entitled to receive notice of and to vote at the Velodyne special meeting.

Quorum; Abstentions and Broker Non-Votes

A quorum of stockholders is necessary to conduct the Velodyne special meeting. A quorum will be present if the holders of a majority in voting power of the shares of capital stock of Velodyne issued and outstanding as of December 5, 2022, the record date, and entitled to vote at the Velodyne special meeting are represented at the Velodyne special meeting in person, present by means of remote communication in a manner, if any, authorized by the Velodyne board of directors in its sole discretion, or by proxy. On the record date, there were in the aggregate 238,281,867 shares of Velodyne common stock outstanding and entitled to vote. Thus approximately 119,140,934 shares must be represented by Velodyne stockholders present at the Velodyne special meeting or by proxy to have a quorum. Your shares will be counted towards the quorum only if you submit a valid proxy vote or vote at the Velodyne special meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If a quorum is not present, the Velodyne special meeting will be adjourned until the holders of the number of shares of Velodyne common stock required to constitute a quorum attend.

If your shares are held by your bank or broker as your nominee (that is, in “street name”), you will need to obtain a voting instruction form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker to vote your shares. If you do not give instructions to your broker, your broker can vote your shares with respect to “discretionary” items, but not with respect to “non-discretionary” items. Discretionary items are proposals considered routine under applicable rules on which your broker may vote shares held in street name without your voting instructions. On non-discretionary items for which you do not give your broker instructions, the shares will be treated as broker non-votes. All of our proposals at the Velodyne special meeting are “non-discretionary” and therefore if you hold your shares through a broker, nominee, fiduciary or other custodian, your shares will not be voted on those proposals unless you provide voting instructions to your broker, nominee, fiduciary or other custodian. It is therefore critical that you cast your vote by instructing your bank, broker or other nominee on how to vote.

If you submit a properly executed proxy card, even if you abstain or vote against any or all of the proposals of the Velodyne stockholder meeting, your shares of Velodyne common stock will be counted as present for purposes of determining whether a quorum is present at the Velodyne special meeting, but the shares represented by that proxy card will not be voted at the Velodyne special meeting for the proposals so marked.

 

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Required Votes; Vote of Velodyne’s Directors and Executive Officers

Except for the Velodyne adjournment proposal, the vote required to approve all of the proposals listed herein assumes the presence of a quorum.

 

Proposal

  

Votes Necessary

Velodyne Proposal #1    Merger agreement proposal    Assuming the presence of a quorum, approval requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Velodyne common stock entitled to vote at the Velodyne special meeting on the Velodyne merger agreement proposal. An abstention, a broker non-vote or the failure of a Velodyne stockholder not present at the meeting to vote will have the same effect as a vote “AGAINST” the Velodyne merger agreement proposal.
Velodyne Proposal #2    Compensation proposal    Assuming the presence of a quorum, the affirmative vote of the holders of a majority of the votes cast at the Velodyne special meeting on the Velodyne compensation proposal is required to approve, on an advisory, non-binding basis, the compensation of our named executive officers. An abstention, a broker non-vote or the failure of a Velodyne stockholder not present at the meeting to vote will have no effect on the outcome of the Velodyne compensation proposal.
Velodyne Proposal #3    Velodyne adjournment proposal    Whether or not there is a quorum, approval of the Velodyne adjournment proposal requires the affirmative vote of the holders of a majority of the votes cast at the Velodyne special meeting on the Velodyne adjournment proposal, and the chairman of the Velodyne special meeting also has the power to adjourn such Velodyne special meeting from time to time. An abstention, a broker non-vote or other failure to vote will have no effect on the outcome of the Velodyne adjournment proposal.

As of the Velodyne record date, Velodyne directors and executive officers, and their affiliates, as a group, owned and were entitled to vote 10,305,117 shares of Velodyne common stock, or approximately 4.3% of the total outstanding shares of Velodyne common stock. The directors and executive officers of Velodyne have entered into voting and support agreements obligating them to vote their shares “FOR” the Velodyne merger agreement proposal and “FOR” the Velodyne adjournment proposal. See also the section entitled “Interests of Velodyne’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus.

Methods of Voting

If you are a stockholder of record as of the record date for the Velodyne special meeting, you may vote by proxy through the Internet, or by mail, or by voting in person at the Velodyne special meeting. For shares held through a bank, broker or other nominee in “street name” instead of as a registered holder, you may vote by submitting your voting instructions to your bank, broker or other nominee. Please refer to the information from your bank, broker or other nominee on how to submit voting instructions. If you do not provide voting instructions to your bank, broker or other nominee, your shares of Velodyne common stock will not be voted on any proposal as your bank, broker or other nominee does not have discretionary authority to vote on any of the proposals to be voted on at the Velodyne special meeting; see the section entitled “—Quorum; Abstentions and Broker Non-Votes” of this joint proxy statement/prospectus.

 

   

By Internet: You may vote by using the Internet at www.proxyvote.com by following the instructions for Internet voting on the Proxy Card mailed to you. Internet voting is available 24 hours a day and will

 

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be accessible until 11:59 p.m. Eastern Time on January 25, 2023. Easy-to-follow instructions allow you to vote your shares and confirm that your instructions have been properly recorded.

 

   

By Mail: You may vote by mail by completing and mailing a Proxy Card.

 

   

At the Special Meeting: All stockholders of record as of the record date may vote in person at the Velodyne special meeting. For more information on how to attend in person, see the section entitled “—Attending the Velodyne Special Meeting” of this joint proxy statement/prospectus.

Even if you plan to attend the Velodyne special meeting, we recommend that you also submit your proxy or voting instructions by Internet or mail so that your vote will be counted if you later decide not to attend the Velodyne special meeting. If you are a stockholder of record, proxies submitted over the Internet or by mail as described above should be received by 11:59 p.m., Eastern Time, on January 25, 2023. To reduce administrative costs and help the environment by conserving natural resources, Velodyne asks that you submit a proxy to vote through the Internet, which is available 24 hours a day.

Notwithstanding the above, if your shares are held in “street name” by a bank, broker or other nominee, you should follow the instructions you receive from your bank, broker or other nominee on how to vote your shares. Registered stockholders who attend the Velodyne special meeting may vote their shares personally even if they previously have voted their shares.

If you deliver a proxy pursuant to this joint proxy statement/prospectus, but do not specify a choice with respect to any proposal set forth in this joint proxy statement/prospectus, your underlying shares of Velodyne common stock will be voted on such uninstructed proposal in accordance with the recommendation of the Velodyne board of directors. No matters other than the proposals listed above will be brought before the Velodyne special meeting and Velodyne bylaws provide that the only business that may be conducted at the Velodyne special meeting are those proposals brought before the meeting pursuant to this joint proxy statement/prospectus.

Revocability of Proxies

Any stockholder giving a proxy has the right to revoke it before the proxy is voted at the Velodyne special meeting by:

 

   

submitting a timely and valid later proxy to vote online at www.proxyvote.com;

 

   

sending a written notice that you are revoking your proxy to the Corporate Secretary of the Company at 5521 Hellyer Avenue, San Jose, CA 95138.

 

   

attending the Velodyne special meeting and voting in person. Simply attending the meeting will not, by itself, revoke your proxy.

Execution or revocation of a proxy will not in any way affect the stockholder’s right to attend the special meeting and vote in person.

Written notices of revocation and other communications with respect to the revocation of proxies should be addressed to:

Velodyne Lidar, Inc.

Attn: Corporate Secretary

5521 Hellyer Avenue

San Jose, CA 95138

 

 

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If your shares are held in “street name” and you previously provided voting instructions to your broker, bank or other nominee, you should follow the instructions provided by your broker, bank or other nominee to revoke or change your voting instructions.

Proxy Solicitation Costs

Velodyne is soliciting proxies to provide an opportunity to all Velodyne stockholders to vote on agenda items, whether or not the stockholders are able to attend the Velodyne special meeting or an adjournment or postponement thereof. Velodyne will bear the entire cost of soliciting proxies from its stockholders, except that Velodyne and Ouster have agreed to each pay one half of the costs and expenses of filing, printing and mailing this joint proxy statement/prospectus and all filing and other similar fees payable to the SEC in connection with this joint proxy statement/prospectus. In addition to the solicitation of proxies by mail, Velodyne will ask banks, brokers and other custodians, nominees and fiduciaries to forward the proxy solicitation materials to the beneficial owners of shares of Velodyne common stock held of record by such nominee holders. Velodyne may be required to reimburse these nominee holders for their customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to the beneficial owners.

Velodyne has retained Kingsdale Advisors, referred to as Kingsdale, to assist in the solicitation process. Velodyne estimates that it will pay Kingsdale a fee of approximately $15,000, plus reimbursement of reasonable expenses. Velodyne also has agreed to indemnify Kingsdale against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions). Proxies may be solicited on behalf of Velodyne or by Velodyne directors, officers and other employees in person, by mail, by telephone, by facsimile, by messenger, via the Internet or by other means of communication, including electronic communication. Directors, officers and employees of Velodyne will not be paid any additional amounts for their services or solicitation in this regard.

Attending the Velodyne Special Meeting

You are entitled to attend the Velodyne special meeting only if you are a stockholder of record of Velodyne at the close of business on December 5, 2022 (the record date for the Velodyne special meeting) or you hold your shares of Velodyne beneficially in the name of a broker, bank or other nominee as of the Velodyne record date, or you hold a valid proxy for the Velodyne special meeting.

If you are a stockholder of record of Velodyne at the close of business on December 5, 2022 and wish to attend the Velodyne special meeting, please so indicate on the appropriate proxy card or as prompted by the Internet system. Your name will be verified against the list of stockholders of record prior to your being admitted to the Velodyne special meeting.

If a broker, bank or other nominee is the record owner of your shares of Velodyne common stock, you will need to have proof that you are the beneficial owner as of the Velodyne record date to be admitted to the Velodyne special meeting. A recent statement or letter from your broker, bank or other nominee confirming your ownership as of the Velodyne record date, or presentation of a valid proxy from a broker, bank or other nominee that is the record owner of your shares, would be acceptable proof of your beneficial ownership.

You should be prepared to present photo identification for admittance. If you do not provide photo identification or comply with the other procedures outlined above upon request, you might not be admitted to the Velodyne special meeting. To obtain directions to attend the Velodyne special meeting and vote in person, please contact Investor Relations by email at investorrelations@velodyne.com or by phone at (669) 275-2251.

If you plan to attend the Velodyne special meeting and vote in person, Velodyne still encourages you to submit a proxy to vote in advance by the Internet, by telephone or (if you received a paper copy of the proxy materials) by mail so that your vote will be counted even if you later decide not to attend the Velodyne special meeting. Submitting your proxy by the Internet, by telephone or by mail will not limit your right to vote at the Velodyne special meeting if you later decide to attend in person.

 

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Householding

If you reside at the same address as another Velodyne stockholder, you and other Velodyne stockholders residing at the same address may receive a single copy of the proxy materials. This process, which has been approved by the SEC, is called “householding.” Once you receive notice from your broker or other nominee record holder that it will be “householding” our proxy materials, the practice will continue until you are otherwise notified or until you notify them that you no longer want to participate in the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.

If you wish to receive a separate copy of the proxy materials, you may do so by making a written or oral request to: Velodyne Lidar, Inc., 5521 Hellyer Avenue, San Jose, CA 95138, Attention: Corporate Secretary or by calling (669) 275-2251. Upon your request, we will promptly deliver a separate copy to you. If you want to receive your own set of our proxy materials in the future, or if you share an address with another stockholder and together both of you would like to receive only a single set of proxy materials, you should contact your broker or other nominee record holder directly or you may contact us at the above address and phone number.

Tabulation of Votes

The Velodyne board of directors will appoint an independent inspector of election for the Velodyne special meeting. The inspector of election will, among other matters, determine the number of shares of Velodyne common stock represented at the Velodyne special meeting to confirm the existence of a quorum, determine the validity of all proxies and ballots and certify the results of voting on all proposals submitted to Velodyne stockholders.

Adjournments

If a quorum is present at the Velodyne special meeting but there are not sufficient votes at the time of the Velodyne special meeting to approve the merger agreement proposal, or, if additional time is necessary, to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Velodyne stockholders, then Velodyne stockholders may be asked to vote on the Velodyne adjournment proposal.

Whether or not a quorum is present, the chairman of the Velodyne special meeting also has the power to adjourn such Velodyne special meeting from time to time.

At any subsequent reconvening of the Velodyne special meeting at which a quorum is present, any business may be transacted that might have been transacted at the original meeting and all proxies will be voted in the same manner as they would have been voted at the original convening of the Velodyne special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

Assistance

If you need assistance voting or in completing your proxy card or have questions regarding the Velodyne special meeting or the mergers, please contact Kingsdale, the proxy solicitation agent for Velodyne:

Kingsdale Advisors

745 Fifth Avenue, 5th Floor

New York, New York 10151

(646)-851-2790 (Call Collect)

Call Toll Free: (877)-659-1821

contactus@kingsdaleadvisors.com

 

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VELODYNE STOCKHOLDERS SHOULD CAREFULLY READ THIS JOINT PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY FOR MORE DETAILED INFORMATION CONCERNING THE MERGER AGREEMENT AND THE MERGERS. IN PARTICULAR, VELODYNE STOCKHOLDERS ARE DIRECTED TO THE MERGER AGREEMENT, WHICH IS ATTACHED AS ANNEX A HERETO.

 

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VELODYNE PROPOSAL #1: VELODYNE MERGER AGREEMENT PROPOSAL

This joint proxy statement/prospectus is being furnished to you as a Velodyne stockholder in connection with the solicitation of proxies by the Velodyne board of directors for use at the Velodyne special meeting. At the Velodyne special meeting, Velodyne is asking Velodyne stockholders to consider and vote upon a proposal to adopt the merger agreement, which is attached as Annex A to this joint proxy statement/prospectus, pursuant to which (i) Merger Sub I will merge with and into Velodyne, which transaction is referred to as the first merger, with Velodyne as the surviving corporation of the first merger and (ii) as soon as practicable after the first merger and as the second step in a single integrated transaction with the first merger, Velodyne will merge with and into Merger Sub II, with Merger Sub II as the surviving company and a direct, wholly owned subsidiary of Ouster. Upon completion of the first merger, Velodyne stockholders will be entitled to receive 0.8204 shares of Ouster common stock for each share of Velodyne common stock held immediately prior to the effective time, and cash in lieu of any fractional shares of Ouster common stock any former holder of Velodyne common stock would otherwise be entitled to receive.

The Velodyne board of directors, after careful consideration, unanimously determined that the mergers are fair to and in the best interests of Velodyne and its stockholders, and approved and declared advisable the merger agreement and the transactions contemplated thereby, including the mergers.

The mergers and a summary of the terms of the merger agreement are described in more detail under “The Mergers” and “The Merger Agreement,” and Velodyne stockholders are encouraged to read the full text of the merger agreement, which is attached as Annex A hereto.

It is a condition to the completion of the mergers that Velodyne stockholders approve the Velodyne merger agreement proposal.

The Velodyne board of directors accordingly unanimously recommends that Velodyne stockholders approve the Velodyne merger agreement proposal.

Assuming a quorum is present at the Velodyne special meeting, the approval of the merger agreement proposal by Velodyne stockholders requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Velodyne common stock entitled to vote at the Velodyne special meeting on the Velodyne merger agreement proposal. An abstention, a broker non-vote or the failure of a Velodyne stockholder not present at the meeting to vote (including the failure of a Velodyne stockholder who holds shares in “street name” through a bank, broker or other nominee to give voting instructions to that bank, broker or other nominee) will have the same effect as a vote cast “AGAINST” the proposal to adopt the merger agreement.

IF YOU ARE A VELODYNE STOCKHOLDER, THE VELODYNE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE MERGER AGREEMENT PROPOSAL (VELODYNE PROPOSAL #1)

 

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VELODYNE PROPOSAL #2: VELODYNE COMPENSATION PROPOSAL

Pursuant to Section 14A of the Exchange Act and Rule 14a-21(c) thereunder, Velodyne is required to submit to a non-binding advisory stockholder vote certain compensation that may be paid or become payable to Velodyne’s named executive officers that is based on or otherwise relates to the mergers as disclosed under “Interests of Velodyne’s Directors and Executive Officers in the Mergers.” The Velodyne compensation proposal gives Velodyne stockholders the opportunity to express their views on the merger-related compensation of Velodyne’s named executive officers.

Accordingly, Velodyne is asking Velodyne stockholders to vote “FOR” the adoption of the following resolution, on a non-binding advisory basis:

“RESOLVED, that the compensation that may be paid or become payable to Velodyne’s named executive officers that is based on or otherwise relates to the mergers, as disclosed pursuant to Item 402(t) of Regulation S-K under the heading “Interests of Velodyne’s Directors and Executive Officers in the Mergers,” including the associated narrative discussion and the agreements, plans, arrangements or understandings pursuant to which such compensation may be paid or become payable, are hereby APPROVED.”

The vote on the Velodyne compensation proposal is a vote separate and apart from the vote to adopt the merger agreement. Accordingly, if you are a Velodyne stockholder, you may vote to approve the Velodyne merger agreement proposal and vote not to approve the Velodyne compensation proposal, and vice versa. The vote on the Velodyne compensation proposal is advisory and non-binding. As a result, if the mergers are completed, the merger-related compensation may be paid to Velodyne’s named executive officers to the extent payable in accordance with the terms of the compensation agreements and arrangements even if Velodyne stockholders do not approve the Velodyne compensation proposal.

The Velodyne board of directors accordingly unanimously recommends that Velodyne stockholders approve the Velodyne compensation proposal.

Assuming a quorum is present at the Velodyne special meeting, approval of the Velodyne compensation proposal requires the affirmative vote of the holders of a majority of the votes cast at the Velodyne special meeting on the Velodyne compensation proposal. An abstention, a broker non-vote or the failure of a Velodyne stockholder not present at the meeting to vote (including a failure to instruct your bank, broker or other nominee to vote) will have no effect on the outcome of the Velodyne compensation proposal.

IF YOU ARE A VELODYNE STOCKHOLDER, THE VELODYNE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE VELODYNE COMPENSATION PROPOSAL (VELODYNE PROPOSAL #2)

 

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VELODYNE PROPOSAL #3: VELODYNE ADJOURNMENT PROPOSAL

The Velodyne special meeting may be adjourned to another time and place if necessary to permit solicitation of additional proxies if there are not sufficient votes to approve the Velodyne merger agreement proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Velodyne stockholders.

Velodyne is asking its stockholders to authorize the holder of any proxy solicited by the Velodyne board of directors to vote in favor of any adjournment to the Velodyne special meeting to solicit additional proxies if there are not sufficient votes to approve the Velodyne merger agreement proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Velodyne stockholders.

The Velodyne board of directors unanimously recommends that Velodyne stockholders approve the proposal to adjourn the Velodyne special meeting, if necessary.

Whether or not there is a quorum, approval of the Velodyne adjournment proposal requires the affirmative vote of the holders of a majority of the votes cast at the Velodyne special meeting on the Velodyne adjournment proposal, and the chairman of the Velodyne special meeting also has the power to adjourn such Velodyne special meeting from time to time. An abstention, a broker non-vote or the failure of a Velodyne stockholder not present at the meeting to vote (including the failure of a Velodyne stockholder who holds shares in “street name” through a bank, broker or other nominee to give voting instructions to that bank, broker or other nominee) will have no effect on the outcome of the Velodyne adjournment proposal.

IF YOU ARE A VELODYNE STOCKHOLDER, THE VELODYNE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE VELODYNE ADJOURNMENT PROPOSAL (VELODYNE PROPOSAL #3)

 

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THE MERGERS

The following is a description of material aspects of the mergers. While Ouster and Velodyne believe that the following description covers the material terms of the mergers, the description may not contain all of the information that is important to you. You are encouraged to read carefully this entire joint proxy statement/prospectus, including the text of the merger agreement attached to this joint proxy statement/prospectus as Annex A, for a more complete understanding of the mergers. In addition, important business and financial information about each of Ouster and Velodyne is included in or incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” of this joint proxy statement/prospectus.

General

Ouster, Inc., which is referred to as Ouster, Velodyne Lidar, Inc., which is referred to as Velodyne, Oban Merger Sub, Inc., a wholly-owned subsidiary of Ouster, which is referred to as Merger Sub I, and Oban Merger Sub II LLC, which is referred to as Merger Sub II, a wholly-owned subsidiary of Ouster, have entered into the Agreement and Plan of Merger, dated as of November 4, 2022 (as it may be amended from time to time), which is referred to as the merger agreement. Pursuant to the terms of the merger agreement, Merger Sub I will merge with and into Velodyne, which transaction is referred to as the first merger, with Velodyne as the surviving corporation in the first merger and as soon as practicable after the first merger and as the second step in a single integrated transaction with the first merger, Velodyne will merge with and into Merger Sub II, which transaction is referred to as the second merger, with Merger Sub II as the surviving company and a wholly-owned subsidiary of Ouster. The first merger and the second merger together are referred to as the mergers. As a result of the first merger, the separate existence of Merger Sub I will cease and Velodyne will continue its existence under the laws of the State of Delaware as the surviving corporation and as a wholly-owned subsidiary of Ouster. As a result of the second merger, the separate existence of Velodyne will cease and Merger Sub II will continue its existence under the laws of the State of Delaware as the surviving company and as a wholly-owned subsidiary of Ouster. Unless and until the parties agree that the combined company should have a different name than what is currently set forth in the charter of Ouster, the combined company’s name will be “Ouster, Inc.”

Exchange Ratio

At the effective time, by virtue of the first merger and without any further action on the part of the parties, holders of any securities of Velodyne, Merger Sub I, Merger Sub II or of any other person, each share of Velodyne common stock that is issued and outstanding immediately prior to the effective time (other than shares of Velodyne common stock owned by Velodyne, Ouster, Merger Sub I or Merger Sub II) will be automatically converted into and become exchangeable for 0.8204 shares of Ouster common stock, which is referred to as the exchange ratio, and cash in lieu of any fractional shares of Ouster common stock any former holder of Velodyne common stock would otherwise be entitled to receive.

The exchange ratio is fixed, which means that it will not change between now and the date of the mergers, regardless of whether the market price of either Ouster common stock or Velodyne common stock changes. Therefore, the value of the merger consideration will depend on the market price of Ouster common stock at the effective time. The market price of Ouster common stock has fluctuated since the date of the announcement of the merger agreement and may continue to fluctuate from the date of this joint proxy statement/prospectus to the date of the special meetings, the date the mergers are completed and thereafter. The market price of Ouster common stock, when received by Velodyne stockholders after the mergers are completed, could be greater than, less than or the same as the market price of Ouster common stock on the date of this joint proxy statement/prospectus or at the time of the special meetings. Accordingly, you should obtain current market quotations for Ouster common stock and Velodyne common stock before deciding how to vote with respect to any of the proposals described in this joint proxy statement/prospectus. Ouster common stock is traded on the New York Stock Exchange, or the NYSE, under the symbol “OUST” and Velodyne common stock is traded on the Nasdaq Global Select Market, or the Nasdaq, under the symbol “VLDR.”

 

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At the effective time, all shares of Velodyne common stock owned by Ouster, Velodyne, Merger Sub I and Merger Sub II will be cancelled and will cease to exist, and no consideration will be delivered in exchange for such shares.

Background of the Mergers

Ouster and Velodyne operate in the intensely competitive lidar market which has been characterized by rapid technological and regulatory changes and heightened foreign and domestic competition as well as competition with established perception technology such as camera and radar. The boards of directors of each of Ouster and Velodyne recognize that many of their competitors are larger with substantially greater financial resources and capacity to invest in the development and marketing of new products and technologies. In the ordinary course of business, the boards of directors of Ouster and Velodyne, together with their respective management, regularly review their respective company’s discovery and development programs, business opportunities and potential transactions to strengthen their respective position and enhance stockholder value. Each of them also, from time to time in the past, has had informal discussions with a number of participants in the lidar industry relating to potential transactions or relationships, including mergers, collaborations, partnerships, licensing and other arrangements.

On September 29, 2020, Velodyne (f/k/a Graf Industrial Corp.) consummated its acquisition of Velodyne Lidar USA, Inc., pursuant to the Agreement and Plan of Merger, dated as of July 2, 2020 (as amended and clarified on August 20, 2020), by and among Velodyne, VL Merger Sub Inc., and Velodyne Lidar USA, Inc., which we refer to as the Velodyne deSPAC Transaction. The closing stock price of Velodyne on September 29, 2020 following the closing of the Velodyne deSPAC Transaction was $24.75 per share.

On March 11, 2021, Ouster (f/k/a Colonnade Acquisition Corp.) consummated its acquisition of Ouster, Inc., pursuant to the Agreement and Plan of Merger, dated as of December 21, 2020, by and among Ouster, Beam Merger Sub Inc., and Ouster, Inc., which we refer to as the Ouster deSPAC Transaction. The closing stock price of Ouster on March 11, 2021 following the closing of the Ouster deSPAC Transaction was $12.00 per share.

On June 14, 2022, Velodyne filed a patent infringement complaint against Ouster in the U.S. District Court for the Northern District of California, seeking an injunction and monetary damages. On June 16, 2022, Velodyne also filed a patent infringement complaint with the U.S. International Trade Commission, which we refer to as the ITC, against Ouster, requesting that the ITC institute an investigation under Section 337 of the Tariff Act of 1930. Velodyne’s complaint asked the ITC to investigate unlawful imports of Ouster lidar sensors that were alleged to infringe Velodyne’s patents relating to lidar technologies (U.S. Patents 7,969,558 and 9,983,297). Velodyne’s complaint requested that the ITC issue a limited exclusion order and a cease and desist order against Ouster and Ouster’s contract manufacturer, to bar the importation into the United States of Ouster’s rotational lidar devices, components, and products that were alleged to infringe the Company’s patents.

On July 8, 2022, Ouster filed a complaint against Velodyne in the Superior Court of California, alleging multiple claims including intellectual property misappropriation and false advertising.

On August 22, 2022, the general counsel of Ouster, Mr. Adam Dolinko, reached out to the general counsel of Velodyne, Mr. Dan Horwood, to inquire whether Velodyne would be interested in pursuing synergistic discussions between the companies. The closing stock price of Velodyne on August 22, 2022 was $1.21 per share and the closing stock price of Ouster on August 22, 2022 was $1.47 per share.

On August 25, 2022, following discussions with other members of Velodyne management, Mr. Horwood indicated to Mr. Dolinko that Velodyne would be interested in discussing strategic possibilities with Ouster management, and Mr. Dolinko and Mr. Horwood put appropriate measures in place to facilitate constructive business discussions separate and apart from the then-existing litigation dispute between the parties. The closing stock price of Velodyne on August 25, 2022 was $1.36 per share and the closing stock price of Ouster on August 25, 2022 was $1.52 per share.

 

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On August 31, 2022, the chief executive officer of Ouster, Mr. Angus Pacala, and the chief executive officer of Velodyne, Dr. Ted Tewksbury, had a telephonic conversation during which Mr. Pacala presented a prospect for Ouster and Velodyne to engage in a merger of equals transaction. Following the meeting, Mr. Pacala discussed the potential transaction and the potential impact of such transaction on Ouster’s business activities with Ouster management and legal counsel and Dr. Tewksbury discussed the potential transaction and the potential impact of such transaction on Velodyne’s business activities with certain members of Velodyne management and legal counsel, as well as informing certain members of the Velodyne board of directors, including Ms. Virginia Boulet, the chairperson of the board. From August 31, 2022 through September 23, 2022, Dr. Tewksbury held multiple phone calls with various members of the Velodyne board of directors regarding the proposed transaction, sharing updates from discussions with Ouster management and proposed next steps.

On September 7, 2022, Dr. Tewksbury and Mr. Pacala exchanged electronic correspondence to coordinate the execution of a non-disclosure agreement between Ouster and Velodyne, which we refer to as the NDA, and to organize a meeting between Ouster management and Velodyne management to continue discussions of the parties’ interest in a potential transaction.

On September 8, 2022, Mr. Dolinko and Mr. Horwood exchanged electronic correspondence regarding the terms of the NDA and both parties agreed on the terms of the NDA on that date.

On September 9, 2022, following discussions with their respective management teams, representatives of both companies executed the NDA on behalf of Ouster and Velodyne.

On September 12, 2022, the Ouster board of directors held a meeting attended by Ouster management and representatives of the law firm Latham & Watkins LLP, which we refer to as Latham. During this meeting, Mr. Pacala and Ms. Anna Brunelle, the chief financial officer of Ouster, provided the Ouster board of directors with an analysis of Ouster’s financial position. Mr. Pacala and Mr. Dolinko provided an executive summary of key considerations for the potential transaction with Velodyne and also provided an overview of the letter agreement to engage Barclays as financial advisor to Ouster in connection with the potential transaction. Following such discussion, the Ouster board of directors authorized and approved Ouster’s engagement of Barclays to act as financial advisor to Ouster in connection with the potential transaction. The Ouster board of directors also authorized Ouster management to prepare a term sheet for purposes of engaging in discussions with Velodyne management. The Ouster board of directors instructed Ouster management to propose that the transaction with Velodyne be structured as a merger of equals with a fixed exchange ratio providing for Ouster stockholders and Velodyne stockholders to each receive 50% of the value of the combined company following the closing. The Ouster board of directors also instructed Ouster management to propose that the chief executive officer of the combined company following the closing be Mr. Pacala and that the Executive Chairman of the combined company following the closing be Dr. Tewksbury.

On September 14, 2022, Mr. Dolinko and Mr. Horwood held an introductory meeting during which Mr. Dolinko presented Ouster’s preliminary view of key terms of the potential transaction, including the proposal for a merger of equals transaction. Mr. Dolinko and Mr. Horwood discussed such preliminary terms, the framework for a non-binding preliminary term sheet and the legal diligence process. Following the meeting, Mr. Dolinko sent the first draft of the non-binding preliminary term sheet, which we refer to as the term sheet, to Mr. Horwood for review and comment.

On September 16, 2022, the Strategic Planning Committee of Ouster held a meeting to discuss the proposed material terms on which Ouster would be willing to continue discussions relating to the proposed transaction and opportunities for operating expense reduction.

On September 19, 2022, members of Ouster management and Velodyne management held an introductory meeting to discuss value creation opportunities that could arise from a potential business combination of Ouster and Velodyne, including opportunities for operating expense reduction, and expected synergies of the combined company. The parties also discussed the term sheet that Ouster had proposed, which included that the transaction

 

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would be structured as a merger of equals and proposed leadership and the structure of the board of directors of the combined company. The parties also discussed next steps, including financial due diligence matters. Attendees at the meeting included, Mr. Pacala and Mr. Mark Frichtl, the co-founders of Ouster and the chief executive officer and chief technology officer, respectively, of Ouster, Ms. Brunelle, Mr. Dolinko, Dr. Tewksbury, Velodyne’s chief financial officer, Mr. Mark Weinswig, and Mr. Horwood. Following this meeting, although the respective management teams of Ouster and Velodyne did not agree to the terms set forth in the term sheet or execute the term sheet, the parties agreed to use the term sheet as a framework to guide further discussions and to present to the Velodyne board of directors.

Also on September 19, 2022, Velodyne engaged Skadden, Arps, Slate, Meagher & Flom LLP, which we refer to as Skadden, to act as its legal advisor in connection with the proposed transaction.

On September 20, 2022, members of Velodyne management had a phone call with representatives of BofA Securities to discuss the proposed transaction.

On September 20, 2022, representatives of Latham prepared a draft exclusivity agreement, which, at the request of Mr. Dolinko, they shared with Mr. Horwood. Representatives of Latham also participated in a meeting with Mr. Dolinko and representatives of Barclays. During this meeting, representatives of Latham provided an overview of the legal diligence process. Further, representatives of Latham provided an overview of the regulatory analysis process to Mr. Dolinko, who authorized such representatives to begin coordinating with representatives of Skadden on the regulatory analysis process.

During the period between September 20, 2022 and September 22, 2022, representatives of Latham and Skadden exchanged electronic correspondence regarding the due diligence process and the draft exclusivity agreement.

From September 21, 2022 to September 23, 2022, Dr. Tewksbury spoke with each member of the Velodyne board of directors to inform them of the ongoing discussions of the proposed transaction with Ouster, including the proposal that Mr. Pacala would be chief executive officer of the combined company and Dr. Tewksbury would be Executive Chairman of the combined company, in advance of the next meeting of the Velodyne board of directors.

On September 22, 2022, representatives from the management teams of both Velodyne and Ouster, with representatives of Skadden, Latham and BofA Securities in attendance, held a conference call to discuss preliminary due diligence planning. Also on September 22, 2022, at the request of Velodyne, representatives of Skadden shared a revised exclusivity agreement with representatives of Latham in the event that the Velodyne board of directors authorized entering into such an agreement. Representatives of Skadden also participated in a meeting with representatives of Latham to discuss the due diligence process.

On September 23, 2022, the Ouster board of directors held a meeting with Ouster management and representatives of Latham. During this meeting, Ms. Brunelle provided the Ouster board of directors with an update regarding Ouster’s preliminary third quarter financial results. Mr. Pacala and Mr. Dolinko provided the Ouster board of directors with an update on the progress that had been made with Velodyne and Skadden with respect to the proposed transaction. Mr. Dolinko discussed key timing considerations and provided an overview of the term sheet that would serve as a guide for the preparation of transaction documents. Mr. Pacala and Mr. Dolinko provided an overview of key rationales that supported a transaction with Velodyne. Mr. Dolinko also provided an overview of the material terms of the exclusivity agreement. Following such discussions, the Ouster board of directors approved and authorized Ouster management to enter into the exclusivity agreement with Velodyne on behalf of Ouster. Following this board meeting, Mr. Dolinko held a meeting with representatives of Latham to discuss the regulatory analysis process and related considerations. Mr. Dolinko then authorized representatives of Latham to circulate an initial draft of the merger agreement to representatives of Skadden. Following such authorization, representatives of Latham provided representatives of Skadden with an initial draft of the merger agreement and a further revised draft of the exclusivity agreement.

 

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On September 24, 2022, Mr. Dolinko and Mr. Horwood exchanged electronic correspondence in which Mr. Dolinko conveyed to Mr. Horwood that the Ouster board of directors was supportive of mutual exclusivity between Ouster and Velodyne.

On September 26, 2022, Mr. Dolinko and Mr. Horwood held a meeting to discuss legal diligence matters.

On September 26, 2022, the Velodyne board of directors held a meeting with Velodyne management and representatives of Skadden and BofA Securities. At the meeting, the Velodyne board of directors discussed the potential opportunity for a strategic transaction between Velodyne and Ouster. Dr. Tewksbury provided the Velodyne board of directors with an overview of the Company’s recent strategic pursuits as well as initial management discussions with Ouster, an overview of Ouster, including among other things a description of Ouster’s business, products and technology and the Ouster and Velodyne litigation. Dr. Tewksbury then explained the perceived potential benefits of the proposed transaction, including anticipated synergies to be derived from combining leadership teams and sales and marketing, financial, technological and operational functions. Members of Velodyne management and representatives of BofA Securities then reviewed with the Velodyne board of directors several considerations regarding the financial aspects of the proposed transaction with Ouster. Members of Velodyne management also discussed with the Velodyne board of directors Ouster’s proposal that Mr. Pacala be the chief executive officer of the combined company and Dr. Tewksbury be the Executive Chairman of the combined company. Following such discussions, the Velodyne board of directors authorized Velodyne management to continue preliminary discussions with Ouster in connection with the proposed transaction, but declined to authorize entering into an exclusivity agreement with Ouster at this time. Representatives of Skadden then provided an overview of the fiduciary duties of the Velodyne board of directors with respect to the evaluation of the proposed transaction. On this same date, at the direction of the Velodyne board of directors, representatives of Velodyne senior management and BofA Securities communicated to representatives of Ouster and Barclays that the Velodyne board of directors was willing to continue discussions on the proposed merger subject to the provision of additional financial due diligence materials by Ouster. Dr. Tewksbury also communicated the same message directly to Mr. Pacala.

On September 27, 2022, Mr. Dolinko participated in several meetings with Mr. Horwood and representatives of Skadden, Barclays and Latham to discuss material issues related to the transaction process, including with respect to the due diligence of each company and regulatory analysis with respect to the proposed transaction. On this same date, Dr. Tewksbury reiterated to Mr. Pacala that Velodyne would need additional financial due diligence materials from Ouster before entering into the exclusivity agreement and also informed Mr. Pacala that Velodyne planned to soon announce its acquisition of Bluecity Technology, Inc., an AI software company, which we refer to as Bluecity.

On September 28, 2022, representatives of Latham circulated a list of legal diligence questions to representatives of Skadden. On this date, Mr. Dolinko and Mr. Horwood had a discussion regarding the terms of the exclusivity agreement.

On September 29, 2022, Ouster management held a meeting with Velodyne management, which representatives of Latham, Barclays and BofA Securities attended, to discuss, among other things, preliminary financial due diligence, including a review of the parties’ respective standalone prospects and potential operating expense cost synergies in the combined company as provided by Velodyne’s and Ouster’s respective managements. Following this meeting, Ouster management held a discussion with representatives of Latham to discuss the overall transaction process, including progress on the merger agreement and due diligence. Also on this date, representatives of BofA Securities and Barclays met to discuss what financial information could potentially be useful in evaluating the financial aspects of the proposed transaction.

During the period between September 29, 2022 and October 2, 2022, Mr. Dolinko, in consultation with representatives of Latham and Barclays, and Mr. Horwood, in consultation with representatives of Skadden and BofA Securities, exchanged electronic correspondence and held several meetings to discuss material issues related to the transaction process, such as the exclusivity agreement, the merger agreement, financial analysis,

 

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legal due diligence, transaction timeline, and litigation matters. On October 2, 2022, Mr. Dolinko, Mr. Horwood and Mr. Weinswig, participated in a conference call to further discuss due diligence matters.

On September 30, 2022, Dr. Tewksbury provided the Velodyne board of directors with an update via email on discussions with Ouster’s management, including among other things the outstanding financial diligence items that Velodyne was requesting before it would agree to enter into the exclusivity agreement with Ouster. The Ouster management team had previously indicated that Ouster would not provide confidential Ouster financial projections prior to entry into an exclusivity agreement with Velodyne. On this date, Dr. Tewksbury also spoke with a member of the Velodyne board of directors to discuss the valuation process as well as certain governance matters relating to the combined company.

On October 3, 2022, following discussions with Ouster management regarding the provision of outstanding Ouster financial diligence items, Dr. Tewksbury held discussions with each member of the Velodyne board,

receiving their approval for Velodyne to enter into the exclusivity agreement with Ouster. Thereafter, on October 3, 2022, following agreement on the terms of the exclusivity agreement between Mr. Dolinko, in consultation with representatives of Latham, and Mr. Horwood, in consultation with representatives of Skadden, Mr. Pacala signed the exclusivity agreement on behalf of Ouster and Dr. Tewksbury signed the exclusivity agreement on behalf of Velodyne.

Also on October 3, 2022, Velodyne completed its acquisition of Bluecity pursuant to a share purchase agreement entered into on the same day. Velodyne issued approximately 1.1 million shares of its common stock to Bluecity stockholders, and reserved approximately 10.9 million shares of Velodyne common stock for issuance upon exchange, at the holder’s option on a one-for-one basis, of non-voting exchangeable shares of Velodyne’s Canadian subsidiary issued to Bluecity stockholders, including approximately 0.7 million shares of Velodyne common stock held back for a period of 12 months to satisfy potential indemnification obligations.

On October 4, 2022, representatives from the management teams of both Velodyne and Ouster held a meeting, which representatives of Barclays and BofA Securities attended, to discuss updated analyses regarding potential operating expense cost synergies in the combined company. On the same date, members of Ouster management shared Ouster’s financial projections with Velodyne management and members of Velodyne management shared Velodyne’s financial projections with Ouster management.

On October 5, 2022, Mr. Dolinko held a meeting with Mr. Horwood to discuss responses to legal due diligence questions related to Ouster and Velodyne. On this same date, representatives of BofA Securities met with representatives of Barclays to discuss, among other things, the potential transaction timetable and due diligence process.

On October 7, 2022, the Ouster board of directors held a meeting with Ouster management and representatives of Latham and Barclays. During this meeting, Ms. Brunelle provided an update on Ouster’s third quarter revenue and margin results. Members of Ouster management then provided an update regarding Ouster management’s analyses regarding opportunities for operating expense synergies in the combined company. Representatives of Barclays also reviewed preliminary financial analyses conducted to date in evaluation of the proposed transaction. Representatives of Latham then provided an overview of the fiduciary duties of the Ouster board of directors with respect to the evaluation of the proposed transaction. Representatives of Latham also provided an overview of the progress made in connection with the regulatory analysis process and expected timelines for completing regulatory review of the proposed transaction. Following this board meeting, Mr. Dolinko held additional meetings with legal counsel, including with representatives of Latham to discuss the regulatory analysis process and representatives of Alvarez & Marsal Holdings, LLC, which we refer to as A&M, was engaged by Ouster management to conduct financial and operational diligence in connection with the proposed transaction, and to discuss findings related to financial and operational diligence.

 

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During the period between October 7, 2022 and October 11, 2022, Mr. Dolinko and Mr. Horwood exchanged electronic correspondence regarding matters related to regulatory analysis, financial analysis, due diligence, employment and benefits, and plans for announcements and communications in connection with the transaction process.

On October 10, 2022, the Velodyne board of directors held a meeting with Velodyne management and representatives of Skadden and BofA Securities. During this meeting, Dr. Tewksbury provided an update on discussions and activities regarding the proposed transaction. Representatives of BofA Securities reviewed with the Velodyne board of directors the preliminary financial analyses with respect to the evaluation of the proposed transaction with Ouster. Following these discussions, the Velodyne board of directors formally ratified the exclusivity agreement previously entered into between the parties and authorized Velodyne management and its advisors to continue to engage with Ouster management and its advisors in due diligence discussions regarding the proposed transaction with the guidance that the Velodyne board of directors was not willing to accept any offer that implied a discount to the market value of common stock held by Velodyne stockholders. On that date, representatives of the Velodyne and Ouster management teams held a meeting, which representatives of Latham, BofA Securities and Barclays attended, to discuss, among other things, the financial performance of Velodyne and Ouster, as well as potential transaction synergies and operations, in a joint due diligence session.

Also on October 10, 2022, Ouster management held a meeting with Velodyne management, which representatives of Barclays and BofA Securities attended, to discuss updated analyses regarding potential operating expense cost synergies in the combined company.

Beginning the week of October 10, 2022, each of Ouster and Velodyne granted the other party and its representatives access to its respective online data room, which included materials responsive to due diligence request lists supplied by Ouster and Velodyne, respectively, and any further due diligence requests made by either party. Following the granting of access to the online data rooms of Ouster and Velodyne, management of Ouster and Velodyne, together with their legal and financial advisors, continued their mutual diligence review and participated in meetings where financial, commercial, regulatory, intellectual property, tax, human resource, legal and corporate information was exchanged by the parties.

On October 11, 2022, Dr. Tewksbury informed Mr. Pacala that the Velodyne board of directors was not willing to accept an exchange ratio that implied a discount to the market value of common stock held by Velodyne stockholders and thus the final equity split may not be exactly 50/50. Mr Pacala reiterated that the Ouster board of directors would not accept a deal unless it took the form of a merger of equals with an even 50/50 equity split. Dr. Tewksbury also requested a meeting on October 13, 2022, between the chief executive officers and chief technology officers of both companies in preparation for the next meeting of the Velodyne board of directors, which would focus on the technology and product portfolios of both companies, subject to appropriate limitations. On this same date, Mr. Horwood, Mr. Dolinko and Mr. Weinswig had a discussion regarding the anticipated timing of the proposed transaction. Mr. Weinswig also had discussions with Mr. Ernie Maddock, the chair of the audit committee of the Velodyne board of directors, on this same date to discuss the proposed transaction, including with respect to the financial due diligence review process.

On October 13, 2022, Mr. Pacala, Dr. Tewksbury, Mr. Dolinko, Mr. Horwood, Mr. Frichtl, and Velodyne’s chief technology officer, Mr. Matthew Rekow, held a meeting to discuss, subject to appropriate limitations, the product portfolios of both companies as well as the proposed transaction timeline and process. On this same date, Mr. Dolinko held a meeting with Mr. Horwood to discuss responses to legal due diligence questions related to Ouster and Velodyne.

On October 14, 2022, the Ouster board of directors held a meeting with Ouster management and representatives of Latham and Barclays. During this meeting, members of Ouster management provided the Ouster board of directors with an update on Ouster management’s analyses regarding opportunities for operating expense synergies in the combined company. Representatives of Barclays then reviewed updated

 

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preliminary financial analyses conducted to date in evaluation of the proposed transaction. Following this board meeting, Ouster management held a meeting with representatives of Latham and Barclays to discuss preparation of the registration statement for the proposed transaction. During a separate meeting on this date, Ouster management also discussed financial and commercial inputs relating to the ongoing regulatory analysis with representatives of Latham.

On October 15, 2022, Dr. Tewksbury had a phone call with a member of the Velodyne board of directors to discuss the timing of the proposed transaction, materials for the upcoming Velodyne board meeting and retention of key employees for the combined company.

On October 16, 2022, Mr. Dolinko and Mr. Weinswig held a meeting at the offices of Skadden in Palo Alto, with Mr. Horwood, Velodyne’s vice president of corporate development, Mr. Jon Barad, and representatives of A&M joining virtually. During the meeting, the parties discussed financial due diligence matters.

On October 17, 2022, Mr. Dolinko, Mr. Horwood and representatives of Skadden, Latham and Wilmer Hale held a meeting, during which representatives of Latham, Mr. Dolinko, Wilmer Hale and Mr. Horwood provided an overview of Velodyne’s and Ouster’s respective ongoing securities litigation matters. On the same date, Velodyne entered into an engagement letter with BofA Securities, pursuant to which Velodyne formally retained BofA Securities to provide certain financial advisory services in connection with a potential strategic business combination involving Velodyne and Ouster.

On October 17, 2022, at the request of Velodyne, representatives of Skadden shared a revised draft of the merger agreement with Latham. Following receipt of the revised draft of the merger agreement, representatives

of Latham held a meeting with Mr. Dolinko to discuss material issues set forth in the revised draft of the merger agreement relating to the treatment of equity interests, termination mechanics, tax matters, employee benefits matters, post-closing governance and certain covenants. On this date, Ouster management also came to an agreement with Velodyne management that the treasury stock method would be applied to the Amazon warrant pursuant to the terms of the merger agreement while additional economic terms and the proposed exchange ratio remained under discussion.

On October 18, 2022, the Velodyne board of directors held a meeting with Velodyne management and representatives of Skadden and BofA Securities. During this meeting, Dr. Tewksbury presented to the Velodyne board of directors on a number of key developments in connection with the proposed transaction, including updates on the diligence process and the sharing of confidential materials, the latest revised draft of the merger agreement and that Ouster had agreed to exclude the potentially dilutive impact of the warrant to acquire Velodyne shares previously issued to Amazon in calculating valuation and the proposed exchange ratio in the proposed transaction. Members of Velodyne’s management team then provided a technical overview of Velodyne and Ouster products and technologies. The Velodyne board of directors evaluated the opportunities and risks of a business combination with Ouster relative to continuing on a standalone basis and, after discussion, instructed Velodyne management and its advisors to continue in further discussions with Ouster and its advisors.

Later that day, representatives of Ouster management and Velodyne management held a meeting, which representatives of their respective advisors attended, to discuss financial diligence matters and opportunities for operating expense reductions in connection with the proposed transaction. Also on this date, Mr. Dolinko had a discussion with representatives of Latham to discuss key considerations relating to certain of Velodyne’s intellectual property license agreements.

During the period between October 18, 2022 and October 24, 2022, representatives of Ouster management and Velodyne management, along with their legal and financial advisors, continued to exchange correspondence and have discussions regarding the ongoing due diligence process, transaction documentation, preparations for public communications and preparations for filing the registration statement in connection with the transactions.

 

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On October 19, 2022, Mr. Horwood and Mr. Dolinko had a call to discuss certain Velodyne intellectual property license agreements. On October 20, 2022, at the direction of the Velodyne board of directors, representatives of BofA Securities held discussions with representatives of Barclays regarding comments from the Velodyne board of directors regarding the exchange ratio to be negotiated between the parties and reiterated the position of the Velodyne board of directors that any exchange ratio negotiated between the parties must not result in an implied discount to the market value of common stock held by Velodyne stockholders. On this date, Dr. Tewksbury and Mr. Pacala also discussed the proposed equity split between Velodyne and Ouster stockholders and Dr. Tewksbury again reiterated that the Velodyne board of directors would not accept a value that implied a discount to the market value of common stock held by Velodyne stockholders.

On October 21, 2022, representatives of Ouster management and Velodyne management discussed a proposal for the exchange ratio to be determined using the volume weighted average price of Ouster and Velodyne common stock calculated over a certain period of time. On this date, the closing stock price of Ouster was $0.92 and the closing stock price of Velodyne was $0.94. Representatives of Ouster management rejected this proposal and continued to advocate for a fixed exchange ratio that would result in Ouster stockholders and Velodyne stockholders each receiving 50% of the value of the combined company following the closing. Representatives of Velodyne management maintained that the Velodyne board of directors would not be supportive of a transaction with an exchange ratio that implied a discount to the market value of common stock held by Velodyne stockholders.

Also on October 21, 2022, Mr. Dolinko and representatives of Latham provided Mr. Horwood and representatives of Skadden with an agenda for a meeting to be held between the parties to discuss the material issues set forth in the revised draft of the merger agreement shared by representatives of Skadden on October 17, 2022. The agenda included requests to discuss alignment on the merger structure, termination fee amounts, treatment of certain equity awards and benefits, certain interim operating covenants, planned communications during the interim period between signing and closing and material due diligence matters.

Also on October 21, 2022, the Ouster board of directors held a meeting with Ouster management and representatives of Latham and Barclays. During this meeting, representatives of Barclays reviewed their preliminary financial analyses of the proposed transaction with Velodyne. Members of Ouster management also presented to the Ouster board of directors on the Ouster Financial Forecasts, the Ouster Combined Company Financial Forecasts and updated analyses regarding opportunities for operating expense synergies in the combined company. Representatives of Latham provided an overview of the fiduciary duties of the board of directors in connection with the evaluation of the proposed transaction with Velodyne. Representatives of Latham also provided an update on key diligence considerations and securities litigation matters. Mr. Dolinko presented an overview of key considerations relating to Velodyne’s intellectual property license agreements. Following such discussion, the Ouster board of directors authorized and approved the use of the Ouster Financial Forecasts and the Ouster Combined Company Financial Forecasts in connection with the preparation of Barclays’ financial analyses and fairness opinion, as more fully described in the section entitled “—Certain Financial Forecasts Utilized in Connection with the Mergers of this joint proxy statement/prospectus. On this date, Ouster management shared Ouster’s financial projections with Velodyne management.

On October 23, 2022, Mr. Weinswig had a discussion with Mr. Maddock regarding the proposed transaction, including with respect to certain accounting matters, financial due diligence and overall next steps and timing of the proposed transaction.

On October 24, 2022, Mr. Dolinko and representatives of Latham held a meeting with Mr. Horwood and representatives of Skadden to discuss the issues set forth on the agenda that was circulated on October 21, 2022.

Also on October 24, 2022, the Velodyne board of directors held a meeting with Velodyne management and representatives of Skadden and BofA Securities. During this meeting, Dr. Tewksbury provided an update on certain key developments with respect to the proposed transaction. Representatives of BofA Securities reviewed

 

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with the Velodyne board of directors an update on preliminary financial analyses with respect to the evaluation of the proposed transaction with Ouster. The Velodyne board of directors discussed Ouster’s proposal that the exchange ratio in the proposed transaction provide for a 50/50 equity split, as determined at signing, and instructed Dr. Tewksbury to reiterate to Ouster that Velodyne would not be willing to proceed with a proposed transaction at a value which implied a discount to the market value of common stock held by Velodyne stockholders. Representatives of Skadden then provided legal advice to the Velodyne board of directors, meeting in executive session, including with respect to the board’s duties in connection with evaluating the proposed transaction. Later that same day, Dr. Tewksbury again communicated to Mr. Pacala that the Velodyne board of directors would not accept a value that implied a discount to the market value of common stock held by Velodyne stockholders. Mr. Pacala reiterated the Ouster board of directors’ position that the equity split should be 50/50 regardless of the premium implied.

On October 25, 2022, representatives of Latham shared a revised draft of the merger agreement with representatives of Skadden. Following receipt of the revised draft of the merger agreement, and over the course of the next few days, representatives of Skadden and members of Velodyne management discussed the key terms of the revised draft of the merger agreement. Also on October 25, 2022, at the direction of the Velodyne board of directors, representatives of BofA Securities held discussions with representatives of Barclays to discuss the Velodyne board of directors’ feedback on the exchange ratio to be negotiated between the parties and reiterated the position of the Velodyne board of directors that any exchange ratio negotiated between the parties must not result in an implied discount to the market value of the common stock held by Velodyne stockholders.

Also on October 25, 2022, the closing stock price of Ouster increased substantially such that the relative exchange ratio would result in Ouster stockholders and Velodyne stockholders each receiving 50% of the value of the combined company following the closing based on recent volume weighted average prices of Ouster and Velodyne common stock. On this date, the closing stock price of Ouster was $1.16 and the closing stock price of Velodyne was $0.95. Ouster management and Velodyne management came to an agreement, subject to approval by their respective boards of directors, to proceed with a fixed exchange ratio that would result in Ouster stockholders and Velodyne stockholders each receiving 50% of the value of the combined company following the closing. On October 25, 2022, Mr. Dolinko and Mr. Horwood held a discussion regarding legal diligence matters and transaction timeline and process.

On October 26, 2022, Mr. Dolinko, Mr. Horwood, Mr. Weinswig and Ms. Brunelle held a meeting with certain other representatives of the finance teams for both Velodyne and Ouster and representatives of Ernst & Young, tax advisor to Ouster, in attendance to discuss the preparation of pro forma financial information for the Registration Statement on Form S-4 to be filed in connection with a proposed transaction.

On October 27, 2022, the Ouster board of directors held a meeting with Ouster management and representatives of Latham and Barclays. Representatives of Barclays reviewed their preliminary financial analysis of the proposed transaction with Velodyne. Representatives of Latham provided an overview of key legal issues relating to the proposed transaction, including an update on the regulatory analysis process and related timing considerations.

Also on October 27, 2022, at the request of Ouster, representatives of Latham shared with representatives of Skadden an initial draft of the voting and support agreement for Ouster’s largest shareholder and for directors and named executive officers of both Velodyne and Ouster to execute in connection with the merger agreement, which we refer to as the voting and support agreements.

Also on October 27, 2022, at the request of Ouster, representatives of Latham sent an initial draft of Ouster’s confidential disclosure schedules to the merger agreement to representatives of Skadden, and at the request of Velodyne, representatives of Skadden sent an initial draft of Velodyne’s confidential disclosure schedules to the merger agreement to representatives of Latham on that same day. Over the course of the next week through the execution of the merger agreement, representatives of Latham, Skadden, Ouster and Velodyne discussed each of Ouster’s and Velodyne’s confidential disclosure schedules and exchanged additional drafts.

 

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On October 28, 2022, at the request of Velodyne, representatives of Skadden shared a revised draft of the merger agreement with representatives of Latham. Following receipt of the revised draft of the merger agreement, representatives of Latham held a meeting with Mr. Dolinko to discuss material issues set forth in the revised draft of the merger agreement relating to termination fee amounts, expense reimbursement amounts, confirmation of the post-closing name and governance of Ouster, mechanics for the Ouster reverse stock split and certain covenants. On that same date, members of Ouster and Velodyne management had a meeting, which representatives of Barclays and BofA Securities attended, to discuss Velodyne’s and Ouster’s preliminary standalone financial forecasts, as provided by Velodyne’s and Ouster’s respective managements, which included draft estimates of future expenses, current and estimated future cash position, and preliminary views on the financial positions of a combined company post-merger, including its expected cash position, as provided by the respective managements.

On October 29, 2022, at the request of Velodyne, representatives of Skadden shared a revised draft of the form of the voting and support agreements with representatives of Latham, which was then agreed to on October 30, 2022.

On October 30, 2022, Mr. Dolinko and Mr. Horwood held a discussion regarding outstanding items on the merger agreement, legal diligence matters and transaction timeline and process. On that same date, Mr. Weinswig and Mr. Dolinko held a meeting at the offices of Skadden in Palo Alto with Mr. Horwood also in attendance via Zoom. During the meeting, the parties discussed updates on legal and financial due diligence, the timeline for the proposed transaction and had a general status update regarding the proposed transaction.

On November 1, 2022, representatives of Latham shared a revised draft of the merger agreement with representatives of Skadden, which reflected guidance from Mr. Dolinko and Ouster management with respect to the termination fee amounts, expense reimbursement amounts, the post-closing name and governance of Ouster, mechanics for determining the Ouster reverse stock split ratio and revisions to certain covenants. Following receipt of the revised draft of the merger agreement, representatives of Skadden discussed key terms of the revised draft of the merger agreement with members of the Velodyne management team, including with Mr. Horwood. On this date, Dr. Tewksbury and Mr. Pacala also discussed Mr. Pacala’s presentation to the Velodyne board of directors later that day.

On November 1, 2022, the Velodyne board of directors held a meeting with Velodyne management and representatives of Skadden and BofA Securities. During this meeting, Dr. Tewksbury provided an update regarding the rationale for the proposed transaction with Ouster, including an overview of key considerations with respect to Velodyne as a standalone business. Dr. Tewksbury then provided an update regarding discussions of the potential leadership team of the combined company, technical abilities and the significant synergies that might be available and their potential impact on the combined company’s timeline to profitability. Representatives of BofA Securities discussed certain perspectives on financial aspects of the proposed transaction. Velodyne’s management prepared and provided to the Velodyne board of directors a pro forma financial forecast for the combined company, including cost synergies and revenue impacts anticipated by Velodyne’s management to result from the transaction. Velodyne management later instructed representatives of BofA Securities to use such pro forma financial forecast, along with financial forecasts for Velodyne’s long-term financial performance prepared by Velodyne management and financial forecasts for Ouster’s long-term financial performance prepared by Ouster management, and extrapolations prepared by Velodyne management for each of such forecasts, in connection with BofA Securities’ analyses and fairness opinion, as more fully described in the section entitled “—Certain Financial Forecasts Utilized in Connection with the Mergers of this joint proxy statement/prospectus. Representatives of Skadden then presented on the material terms of the merger agreement and other draft transaction documents as well as regarding various legal considerations. Following this discussion, Mr. Pacala joined the meeting to be introduced and to present to the Velodyne board of directors on, among other things, Ouster’s strategic rationale for the proposed transaction and his vision for the combined company that would result from it.

 

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On November 2 and 3, 2022, the Compensation Committee of the Velodyne board of directors held a meeting with Velodyne management and representatives of Skadden to discuss retention and compensation matters in connection with the proposed transaction.

On November 2, 2022, the Ouster board of directors held a meeting with Ouster management and representatives of Latham and A&M. During this meeting, Mr. Pacala provided an update regarding discussions with Dr. Tewksbury and Velodyne management regarding Mr. Pacala’s role and vision as chief executive officer of the combined company. Representatives of A&M presented key financial and operational diligence findings regarding the proposed transaction with Velodyne. Representatives of Latham presented an overview of the material terms of the merger agreement and key considerations regarding intellectual property, employee benefits and retention, and regulatory matters. Following this board meeting, Mr. Dolinko and Mr. Horwood had a discussion regarding legal diligence matters and transaction timeline and process.

On November 3, 2022, at the request of Velodyne, representatives of Skadden shared a revised draft of the merger agreement with Latham, which reflected alignment between the parties on material issues related to termination fee amounts, expense reimbursement amounts, the post-closing name and governance of Ouster, mechanics for determining the Ouster reverse stock split ratio and certain covenants. Members of Ouster and Velodyne management, with the assistance of representatives of Barclays and BofA Securities, continued negotiations on the calculation of the exchange ratio for the proposed transaction. On this date, Ouster management and Velodyne management ultimately agreed to recommend to their respective boards of directors an exchange ratio of 0.8204 shares of Ouster common stock per share of Velodyne common stock, which would represent pro forma ownership for Velodyne stockholders in the combined company post-merger of approximately 50% on a fully diluted basis. Also on this date, Dr. Tewksbury and Mr. Pacala discussed expected synergy targets and operating expense reduction goals for the combined company.

On November 4, 2022, Dr. Tewksbury and Mr. Pacala further discussed governance matters for the combined company. Following this discussion, representatives of Latham shared a proposed final draft of the merger agreement with representatives of Skadden, which reflected the proposed exchange ratio, as recommended by Ouster management and Velodyne management. On this date, the Ouster board of directors also held a virtual meeting with Ouster management and representatives of Barclays and Latham, which was held for the purpose of considering approval and adoption of the merger agreement with Velodyne. Representatives of Latham reviewed legal matters including Ouster directors’ duties in connection with the proposed transaction with Velodyne and reviewed with the Ouster board of directors key terms of the merger agreement. Representatives of Barclays then reviewed with the Ouster board of directors its financial analysis of the Ouster exchange ratio in the proposed transaction and delivered to the Ouster board of directors its oral opinion, which was confirmed by delivery of a written opinion dated November 4, 2022, to the effect that, as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its written opinion, the exchange ratio to be paid by Ouster in the proposed transaction was fair, from a financial point of view, to Ouster, as more fully described in the section entitled “—Opinion of Barclays, Ouster’s Financial Advisor of this joint proxy statement/prospectus. Following the presentation, Mr. Pacala provided Ouster management’s view of the proposed transaction and the Ouster board of directors discussed the proposed transaction. Following this discussion, the Ouster board of directors approved and adopted the merger agreement, approved the transactions contemplated by the merger agreement and resolved to recommend that Ouster stockholders approve the share issuance proposal.

Also on November 4, 2022, the Velodyne board of directors held a meeting with Velodyne management and representatives of Skadden and BofA Securities in attendance, which was held for the purpose of considering approval and adoption of the merger agreement with Ouster. Representatives of BofA Securities reviewed with the Velodyne board of directors its financial analysis of the Velodyne exchange ratio in the proposed transaction and delivered to the Velodyne board of directors its oral opinion, which was confirmed by delivery of a written opinion dated November 4, 2022, to the effect that, as of such date and based upon and subject to various assumptions, limitations, qualifications and other matters described in such opinion, the Velodyne exchange ratio

 

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in the proposed transaction was fair, from a financial point of view, to the holders of Velodyne common stock, as more fully described in the section entitled “—Opinion of BofA Securities, Velodyne’s Financial Advisor of this joint proxy statement/prospectus. Representatives of Skadden then reviewed the key terms of the merger agreement, provided a summary of the proposed resolutions of the Velodyne board of directors related to the approval of the merger agreement and the transactions contemplated in connection therewith and again presented to the Velodyne board of directors on its fiduciary duties in the context of the proposed transaction. Following these discussions, the Velodyne board of directors unanimously approved and adopted the merger agreement and approved the transactions contemplated by the merger agreement, subject to the finalization of certain governance issues, and authorized the submission of the merger agreement to the stockholders of Velodyne for approval and adoption. The Velodyne board of directors also approved and adopted the proposed resolutions, which included, among other things, the voting and support agreements.

In the evening of November 4, 2022, post-market close, the merger agreement was executed by Ouster and Velodyne and the confidential disclosure schedules of each Ouster and Velodyne were finalized. The transaction was announced by joint press release on the morning of November 7, 2022, pre-market open.

Recommendation of the Ouster Board of Directors; Ouster’s Reasons for the Mergers

At a special meeting held on November 4, 2022, the board of directors of Ouster, which is referred to as the Ouster board of directors:

 

   

determined that the merger agreement, the mergers and the other transactions contemplated thereby, including but not limited to the share issuance, are fair to, and in the best interests of, Ouster and its stockholders;

 

   

approved and declared advisable the merger agreement, the mergers, and the other transactions contemplated by the merger agreement, on the terms and subject to the conditions set forth therein;

 

   

directed that the share issuance be submitted to Ouster stockholders for their approval, respectively; and

 

   

resolved to recommend that Ouster stockholders vote in favor of the share issuance proposal and the reverse stock split proposal.

Accordingly, the Ouster board of directors unanimously recommends that Ouster stockholders vote “FOR” the Ouster share issuance proposal, “FOR” the Ouster reverse stock split proposal, and “FOR” the Ouster adjournment proposal.

In reaching its determinations and recommendations, the Ouster board of directors as described in the section entitled “—Background of the Mergers” of this joint proxy statement/prospectus, held a number of meetings, consulted with Ouster’s senior management and its outside legal and financial advisors, and considered a number of factors, including the following factors that weighed in favor of the mergers (not necessarily presented in order of relative importance).

 

   

Benefits of a Combined Company. The belief of the Ouster board of directors that the combined company would be well-positioned to increase value for Ouster stockholders, including due to:

 

   

the highly complementary portfolios of Ouster and Velodyne coupled with a unified engineering team for execution on the combined company’s future product roadmap at reduced costs, which are expected to provide the combined company with the opportunity to become a world leading lidar technology manufacturer;

 

   

the expectation that the combination of Ouster and Velodyne and their extended distribution network and future forward products will significantly expand the serviceable obtainable market of the combined company with a robust suite of products for its customers;

 

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the Ouster board of directors’ positive view of the ability of the combined company, due to the combined company’s broader scale, to expand the combined company’s presence in key geographies and better invest in, support, and provide innovative services to a global customer base;

 

   

the expectation that the combined company will generate approximately $75 million annualized cost synergies, expected to be realized within nine months following the closing of the mergers;

 

   

Ouster’s confidence that the mergers are more attractive to Ouster than remaining as a stand-alone company or pursuing other acquisition or business combination opportunities reasonably available to Ouster, including because of Velodyne’s complementary intellectual property portfolio, the benefits expected from the customer diversification to be achieved through the mergers and the expected size, scale, and financial strength of the combined company;

 

   

the expectation that the combined company will be well-capitalized, with enhanced operational synergies from the combined enterprise, resulting in a stronger cash position that would enable strategic capital deployment by the combined company in order to accelerate the path to profitability and further increase stockholder value; and

 

   

the perceived similarities between the cultures of Ouster and Velodyne, including shared values and commitment to integrity, operational excellence, strategic focus, stockholder value, and customer satisfaction that would facilitate integration of the two companies.

 

   

Exchange Ratio and Merger Consideration. The Ouster board of directors considered the favorability of the exchange ratio relative to the current assessment of the valuation of each company and of the expected synergies and other benefits of the mergers, in addition to:

 

   

the all-stock consideration provides Ouster stockholders with an opportunity to participate in the equity value of the combined company, including future growth and the expected synergies resulting from the mergers;

 

   

the fact that the merger agreement provides for a fixed exchange ratio and no adjustment will be made in the merger consideration to be received by Velodyne stockholders in the mergers as a result of possible increases or decreases in the trading price of Ouster common stock or Velodyne common stock following the announcement of the mergers;

 

   

the expectation that, upon completion of the first merger, Ouster stockholders would own approximately 50% of the combined company and therefore are expected to participate equally with Velodyne stockholders in the value of the combined company, including expected increased value based on cost synergies, future growth opportunities and other expected benefits of the mergers;

 

   

the oral opinion of Barclays, subsequently confirmed in writing, rendered to the Ouster board of directors that, as of November 4, 2022, and based upon and subject to the qualifications, limitations, and assumptions stated in the opinion, the exchange ratio to be paid by Ouster in the mergers was fair, from a financial point of view, to Ouster. Such opinion is more fully described below under the section entitled “—Opinion of Barclays, Ouster’s Financial Advisor” of this joint proxy statement/prospectus, and the full text of the written opinion of Barclays, which is attached as Annex F to this joint proxy statement/prospectus.

 

   

Governance Structure for the Combined Company. The Ouster board of directors considered the governance structure for the combined company, as reflected in the merger agreement, including:

 

   

the equal representation of directors from each of Ouster and Velodyne on the board of directors of the combined company, reflecting the two companies’ commitment to integration, with the board including up to four directors from Velodyne (including Dr. Ted Tewksbury as the Executive Chairman of the combined company’s board of directors), and up to four directors from Ouster (including Mr. Angus Pacala, the current Ouster CEO);

 

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that Dr. Ted Tewksbury, one of Velodyne’s current directors and Velodyne’s current CEO, would be the Executive Chairman of the board of directors of the combined company following the mergers, and the Velodyne board of directors’ view of Dr. Ted Tewksbury as a leader with a strong reputation in the lidar technology industry;

 

   

that Mr. Pacala, the current Ouster CEO, would be the chief executive officer of the combined company following the mergers, and the Ouster board of directors’ view of Mr. Pacala as having a strong track record as chief executive officer of Ouster;

 

   

that the combined company will continue to be led both by Ouster’s current Chief Executive Officer and by up to four directors selected by Ouster to be appointed to the combined company board of directors, which the Ouster board of directors believes will enhance the likelihood of attaining the strategic benefits that Ouster expects to derive from the mergers;

 

   

that the headquarters of the combined company will be in San Francisco, California.

 

   

Other Factors Considered by the Ouster Board of Directors. In addition to considering the factors described above, the Ouster board of directors considered the following additional factors that weighed in favor of the mergers:

 

   

historical information concerning Ouster’s and Velodyne’s respective businesses, financial condition, results of operations, earnings, trading prices, and management teams;

 

   

Ouster’s prospects on a stand-alone basis and forecasted combined basis;

 

   

the expected treatment of the mergers as a tax-free reorganization under Section 368(a) of the Code for U.S. federal income tax purposes, as more fully described in the section entitled “U.S. Federal Income Tax Consequences of the Mergers” of this joint proxy statement/prospectus; and

 

   

the current and prospective business environment in which Ouster and Velodyne operate, including international, national and local economic conditions and the competitive and regulatory environment, and the likely effect of these factors on Ouster and the combined company.

 

   

Terms of the Merger Agreement. The Ouster board of directors considered that the terms of the merger agreement, taken as a whole, including the parties’ representations, warranties and covenants, and the circumstances under which the merger agreement may be terminated, in its belief, are reasonable. The

  Ouster board of directors also reviewed and considered the conditions to the completion of the mergers, and concluded that while the completion of the mergers is subject to various conditions, including certain approvals, such conditions and approvals were likely to be satisfied on a timely basis. The Ouster board of directors weighed these advantages and opportunities against a number of potentially negative factors in its deliberations concerning the merger agreement and the mergers, including:

 

   

the risk that, because the exchange ratio under the merger agreement was fixed as of the time of execution of the merger agreement and would not be adjusted for changes in the market prices of Ouster common stock or Velodyne common stock, the trading price of the shares of Ouster common stock to be issued to holders of shares of Velodyne common stock upon the consummation of the mergers could be significantly higher than it was at the time the merger agreement was entered into, and the fact that the merger agreement does not provide Ouster with a price-based termination right or other similar protection;

 

   

the risk that Velodyne’s financial performance may not meet Ouster’s expectations;

 

   

the potential challenges in integrating the operations of Ouster and Velodyne and the risk that anticipated cost savings, operational efficiencies, other anticipated cost benefits of the mergers, expected revenue growth, or other non-cost synergies of the mergers might not be realized or might take longer to realize than expected;

 

   

the possible diversion of management attention for an extended period of time during the pendency of the mergers and, following closing, the integration of the two companies;

 

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the substantial costs to be incurred in connection with the mergers, including those that could be incurred regardless of whether the mergers are consummated;

 

   

the ability of the Velodyne board of directors, in certain circumstances, to terminate the merger agreement or change its recommendation that Velodyne stockholders approve the Velodyne merger agreement proposal;

 

   

the possibility that the mergers may not be completed or that completion may be unduly delayed for reasons beyond the control of Ouster or Velodyne, including the failure to receive necessary regulatory approvals or obtain Velodyne stockholders approval of the merger agreement;

 

   

that the restrictions on the conduct of Ouster’s business prior to the consummation of the mergers, although believed to be reasonable and not unduly burdensome, may delay or prevent Ouster from undertaking business opportunities that may arise or other actions it would otherwise take with respect to the operations of Ouster pending the consummation of the mergers;

 

   

that certain Ouster directors and executive officers have interests in the mergers that are different from, or in addition to, the interests of Ouster stockholders generally, as described in the section titled “Interests of Ouster’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus;

 

   

the possibility of losing key employees and skilled workers as a result of the expected consolidation of Ouster’s and Velodyne’s personnel when the mergers are completed;

 

   

that Ouster would be required to pay to Velodyne a termination fee of $7 million in the event the Ouster board of directors were to terminate the merger agreement under certain circumstances; and

 

   

the risks of the type and nature described in the section entitled “Risk Factors” of this joint proxy statement/prospectus and the matters described in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” of this joint proxy statement/prospectus.

The Ouster board of directors considered all of these factors as a whole and, on balance, concluded that the potential benefits of the mergers outweighed the risks and uncertainties of the mergers. Accordingly, the Ouster board of directors approved the merger agreement, the share issuance, the mergers and the other transactions contemplated by the merger agreement.

In addition, the Ouster board of directors was aware of and considered the interests of its directors and executive officers that are different from, or in addition to, the interests of Ouster stockholders generally described in the section entitled “Interests of Ouster’s Directors and Executive Officers in the Mergers” of this joint proxy statement/prospectus.

The foregoing discussion of the information and factors that the Ouster board of directors considered is not intended to be exhaustive, but rather is meant to include the material factors that the Ouster board of directors considered. The Ouster board of directors collectively reached the conclusion to approve the Ouster share issuance, the mergers and the other transactions contemplated by the merger agreement in light of the various factors described above and other factors that the members of the Ouster board of directors believed were appropriate. In view of the complexity and wide variety of factors, both positive and negative, that the Ouster board of directors considered in connection with its evaluation of the mergers, the Ouster board of directors did not find it practical, and did not attempt, to quantify, rank or otherwise assign relative or specific weights or values to any of the factors it considered in reaching its decision and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Ouster board of directors. In considering the factors discussed above, individual directors may have given different weights to different factors.

 

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The foregoing description of Ouster’s consideration of the factors supporting the mergers is forward-looking in nature. This information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” of this joint proxy statement/prospectus.

Recommendation of the Velodyne Board of Directors; Velodyne’s Reasons for the Mergers

At a meeting held on November 4, 2022, the Velodyne board of directors unanimously: (i) determined that the terms of the merger agreement and the transactions contemplated thereby are fair to and in the best interests of Velodyne and its stockholders; (ii) declared advisable, approved and authorized in all respects the merger agreement, the performance of Velodyne of its obligations thereunder and the consummation of the transactions contemplated thereby, on the terms and subject to the conditions set forth in the merger agreement; and (iii) recommended that Velodyne stockholders adopt the merger agreement.

ACCORDINGLY, THE VELODYNE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT VELODYNE STOCKHOLDERS VOTE “FOR” THE VELODYNE MERGER PROPOSAL, “FOR” THE VELODYNE COMPENSATION PROPOSAL AND “FOR” THE VELODYNE ADJOURNMENT PROPOSAL.

As described under “—Background of the Mergers,” in evaluating the merger agreement and the transactions contemplated thereby, including the mergers, the Velodyne board of directors held a number of meetings and consulted with Velodyne senior management and its outside legal and financial advisors. In reaching its decision to approve the merger agreement and to recommend that Velodyne stockholders vote to adopt the merger agreement, the Velodyne board of directors considered a number of factors, including, but not limited to the following (which are not necessarily presented in order of their relative importance to the Velodyne board of directors):

 

   

the opportunity to combine two complementary businesses with a well-positioned and robust suite of products, extensive technology portfolios and product offerings, combining cutting-edge digital lidar technology and innovative hardware and software solutions, to serve a broad set of customers globally;

 

   

the importance of scale in the competitive market environments in which Velodyne and Ouster operate, and the potential for the mergers to enhance the combined company’s ability to compete effectively in those environments and across multiple end markets, capitalize on new growth opportunities, and to compete for customers and key employee talent;

 

   

the ability of the combined company to reach addressable market segments by combining Velodyne’s broad portfolio of lidar technologies and sensor and software solutions in a wide range of industries, including industrial, intelligent infrastructure and robotics, autonomous vehicles and advanced driver assistance systems (ADAS), with Ouster’s existing capabilities in high-resolution digital lidar sensors for the automotive, industrial, smart infrastructure and robotics industries;

 

   

the expectation that the combined intellectual property portfolio and engineering and research teams, backed by over 20 years of combined experience in lidar innovation, will enable the combined company to develop highly innovative products;

 

   

the ability to optimize the manufacturing resources of the combined company to support a compelling product roadmap and accelerate the combined company’s path to profitability;

 

   

the ability to allow for employees to benefit from more broad-ranging opportunities as part of a larger and better capitalized business, which provides a stronger platform for innovation and growth, and to attract and retain key talent to deliver on the growth opportunities of the combined company;

 

   

the expectation that the combination would improve Velodyne’s and Ouster’s existing customer relationships, enable the combined company to meet customer needs more effectively and to deliver more comprehensive solutions to Velodyne’s and Ouster’s customers;

 

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the cultural alignment between Velodyne and Ouster, including shared cultures of innovation, excellence and collaboration, and that this cultural alignment is expected to accelerate lidar adoption across fast-growing end markets and create a premier growth franchise;

 

   

the Velodyne board of directors’ consideration, from time to time, with the assistance of Velodyne management and Velodyne’s financial and legal advisors, of the various strategic alternatives available to Velodyne, including remaining as an independent company and continuing to execute on Velodyne’s standalone strategic plan, and the Velodyne board of directors’ belief that the mergers present a more favorable opportunity for Velodyne stockholders than the potential value that may result from remaining a standalone company or pursuing other strategic alternatives;

 

   

the Velodyne board of directors’ knowledge of, and discussions with Velodyne management regarding, Velodyne’s business, operations, financial condition, earnings, strategy and future prospects, including Velodyne’s opportunities to create stockholder value in the future on a standalone basis and potential risks in the execution of Velodyne’s standalone strategic plan;

 

   

discussions with Velodyne management and Velodyne’s financial and legal advisors regarding Ouster’s business, operations, strategy and future prospects, and the Velodyne board of directors’ view regarding the combined company’s financial condition as well as the diversification and growth expected to result from the mergers;

 

   

the expectation that the combined company will generate approximately $75 million annualized cost synergies, expected to be realized within nine months following the closing of the mergers, that would accelerate the combined company’s timeline to profitability and enable the Velodyne stockholders to participate in the benefits of such synergies as stockholders of the combined company;

 

   

the Velodyne board of directors’ view that the combined company will be well-capitalized with a strong balance sheet, and ability to generate free cash flow and, thereby, return capital to stockholders;

 

   

the expectation that the increased scale and enhanced financial position of the combined company will provide more flexibility to pursue various strategic initiatives in the lidar industry, including, but not limited to, organic investments, partnerships, joint ventures, strategic acquisitions and divestitures;

 

   

the Velodyne board of directors’ view that the growth opportunities brought by the combination would facilitate future capital raising and investment activities for the combined company;

 

   

the per share value of the merger consideration to be received by Velodyne stockholders (0.8204 shares for each share of Velodyne common stock, which reflected an approximate premium of 7.85%, based on the closing stock price of Velodyne common stock of $0.89 on November 4, 2022, the last full trading day prior to the date of announcement, and 2.7%, based on the closing stock price of Velodyne common stock of $0.9 on November 3, 2022, the last full trading day prior to the date of the Velodyne board of directors’ approval of the mergers);

 

   

the exchange ratio of 0.8204 shares of Ouster common stock for each share of Velodyne common stock is fixed, which affords Velodyne stockholders the opportunity to benefit from any appreciation in the value of the Ouster common stock after the announcement of the mergers, that the exchange ratio was the result of extensive negotiation between the parties and the Velodyne board of directors’ belief that the final exchange ratio represented the highest and best value that Velodyne could obtain from Ouster;

 

   

the fact that Velodyne stockholders and Ouster stockholders will each own approximately 50% of the combined company on a pro forma basis (based on the number of shares of Velodyne common stock and Ouster common stock outstanding as of November 4, 2022 and the exchange ratio) and have the opportunity to participate in the future earnings and growth of the combined company;

 

   

the structure of the transaction as a merger of equals, including the governance terms in the merger agreement providing that:

 

   

the board of directors of Ouster will be comprised of eight members, with each of Velodyne and Ouster appointing an equal number of members;

 

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Dr. Ted Tewksbury will join the combined company as Executive Chairman of the board, which is expected to provide a level of continuity for the Velodyne business, its stockholders and other stakeholders and help realize the anticipated benefits of the mergers;

 

   

a strong management team drawn from both Ouster and Velodyne would work together to integrate the two companies;

 

   

the opinion of BofA Securities, dated November 4, 2022, to Velodyne’s board of directors as to the fairness, from a financial point of view, and as of the date of the opinion, of the exchange ratio to the holders of Velodyne common stock (as more fully described below under “ —Opinion of BofA Securities, Velodyne’s Financial Advisor” and is attached as Annex G hereto);

 

   

the expected treatment of the mergers as a tax-free reorganization under Section 368(a) of the Code for U.S. federal income tax purposes, as more fully described under “U.S. Federal Income Tax Consequences of the Mergers”;

 

   

the fact that the market capitalization of each of Velodyne and Ouster was relatively equal at the time of the Velodyne board of directors’ evaluation of the mergers;

 

   

the Velodyne board of directors’ view, based on discussions with Velodyne management, of the ability for the combined company to integrate and combine the respective Velodyne and Ouster businesses;

 

   

the review by the Velodyne board of directors with its legal and financial advisors of the structure of the proposed mergers and the financial and other terms of the merger agreement, including the parties’ representations, warranties and covenants, the conditions to their respective obligations to complete the proposed mergers and the termination provisions and related termination fees, as well as the Velodyne board of directors’ conclusion that, although the proposed mergers were potentially subject to various regulatory reviews or approvals and other conditions, any such required approvals, if applicable, were likely to be obtained and the proposed mergers completed on a timely basis. In connection with such review, the Velodyne board of directors also considered the following specific aspects of the merger agreement (which are not necessarily presented in order of relative importance):

 

   

that Velodyne and Ouster agreed to use their respective reasonable best efforts to complete the mergers and obtain the necessary approvals and clearances required under applicable antitrust laws or other regulatory regimes;

 

   

the nature of the closing conditions included in the merger agreement, including the reciprocal exceptions to the events that would constitute a material adverse effect on either Velodyne or Ouster for purposes of the merger agreement, as well as the likelihood of satisfaction of all conditions to completion of the transactions;

 

   

that the representations and warranties of Velodyne and Ouster, as well as the interim operating covenants requiring the parties to conduct their respective businesses in the ordinary course prior to completion of the mergers, subject to specific limitations, are generally reciprocal;

 

   

the terms of the voting and support agreements entered into separately by Ouster’s directors and executive officers, Banyan Venture Holdings LLC, a major stockholder of Ouster, and Velodyne’s directors and executive officers, pursuant to which, in connection with the execution of the merger agreement, each of Ouster’s directors and executive officers, Banyan Venture Holdings LLC and Velodyne’s directors and executive officers agreed to vote in favor of the proposals related to the transaction, including the mergers, with respect to the Ouster shares of common stock and Velodyne shares of common stock owned by them, as applicable;

 

   

the fact that there are limited circumstances in which the Ouster board of directors may terminate the merger agreement or change its recommendation that Ouster stockholders approve the Ouster share issuance proposal, and the requirement that Ouster pay Velodyne a $7 million termination fee if the merger agreement is terminated under certain circumstances, including if the merger agreement is terminated by Velodyne as a result of a change in recommendation by the Ouster board of directors;

 

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Velodyne’s right to engage in negotiations with, and provide information to, a third party that makes an unsolicited bona fide written proposal relating to an alternative transaction, if the Velodyne board of directors has determined in good faith, after consultation with its outside legal counsel and financial advisor, that such proposal constitutes or could reasonably be expected to lead to a transaction that is superior to the mergers with Ouster and that failure to take action with such proposal, would reasonably be expected to constitute a breach of its fiduciary duties under applicable law;

 

   

the right of the Velodyne board of directors to change its recommendation that Velodyne stockholders vote to adopt the merger agreement in response to a superior proposal or certain intervening events, subject to certain conditions, and the Velodyne board of directors’ view that the termination fee of $7 million payable to Ouster under certain circumstances is customary and reasonable and would not preclude or deter a willing and financially capable third party from making an acquisition proposal for an alternative transaction;

 

   

the fact that there are no financing conditions or contingencies, and that Ouster does not require financing in order to complete the mergers; and

 

   

the fact that Velodyne has the right to specifically enforce Ouster’s obligations under the merger agreement.

In the course of its evaluation of the merger agreement and the mergers, the Velodyne board of directors also considered a variety of risks, uncertainties and other potentially negative factors, including the following (which are not necessarily presented in order of relative importance):

 

   

the fact that the exchange ratio under the merger agreement is fixed, meaning that Velodyne stockholders could be adversely affected and the implied value of the merger consideration will decline if there is a decline in the trading price of the Ouster common stock;

 

   

that there is no assurance that, even if approved by Velodyne stockholders, the mergers will be completed on the anticipated timeline or at all;

 

   

the risk that the combined company will not realize all of the anticipated strategic and other benefits of the mergers, including the possibility that Ouster’s financial performance may not meet Velodyne’s expectations and that the expected synergies may not be realized or will cost more to achieve than anticipated;

 

   

the challenges inherent in completing the mergers and integrating the business, operations and workforce of Velodyne and Ouster and the risk that the anticipated benefits of the mergers might not be realized or may take longer to realize than expected;

 

   

the amount of time it could take to complete the mergers, including that completion of the mergers depends on factors outside of the control of Velodyne or Ouster, and the risk that the pendency of the mergers for an extended period of time following the announcement of the execution of the merger agreement could have an adverse impact on Velodyne or Ouster, including their respective customer, supplier and other business relationships and potentially impact the trading price of their respective common stock;

 

   

the possible diversion of management attention for an extended period of time during the pendency of the mergers;

 

   

the risk that, despite the retention efforts of Velodyne and Ouster prior to the consummation of the mergers, the combined company may not retain key personnel or there may be employee attrition;

 

   

the provisions of the merger agreement that restrict the ability of Velodyne to solicit or negotiate alternative transactions and that such provisions and the potential requirement to pay Ouster a termination fee of $7 million, as described under “The Merger Agreement—Termination Fees,” may deter a potential acquirer from proposing an alternative transaction for Velodyne that would provide Velodyne stockholders with greater value than the mergers;

 

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Ouster’s right, subject to certain conditions, to respond to and negotiate with respect to certain acquisition proposals from third parties made prior to the time Ouster stockholders approve the Ouster share issuance proposal;

 

   

the potential for litigation relating to the proposed mergers and the associated costs, burden and inconvenience involved in defending any such proceedings;

 

   

the fact that in connection with entering into the merger agreement with Ouster, Velodyne agreed to cooperate with Ouster to dismiss pending litigation matters between Velodyne and Ouster no later than 7 days after execution of the merger agreement;

 

   

the restrictions in the merger agreement on the conduct of Velodyne’s business during the period between execution of the merger agreement and the consummation of the mergers, including that Velodyne is required to conduct its business in the ordinary course consistent with past practice, subject to specific limitations, which could delay or prevent Velodyne from pursuing certain business opportunities or strategic transactions that may arise and could have a negative impact on Velodyne’s ability to maintain its existing business and employee relationships;

 

   

the risk that Velodyne stockholders may not approve the adoption of the merger agreement at the Velodyne special meeting or that Ouster stockholders may not approve the Ouster share issuance proposal at the Ouster special meeting;

 

   

the possibility that regulatory agencies may delay, object to or challenge the mergers or may impose terms and conditions on their approvals that adversely affect the business or financial results of Velodyne, Ouster or the combined company, as more fully described under “The Merger Agreement—Cooperation; Efforts to Consummate”;

 

   

the fact that the opinion of BofA Securities as to the fairness, from a financial point of view, of the exchange ratio provided for in the mergers speaks only as of the date of such opinion and did not and will not take into account events occurring or information that has become available after such date, including any changes in the operations and prospects of Velodyne or Ouster, financial, economic, monetary, market and other conditions and other factors that may be beyond the control of Velodyne and Ouster and on which such opinion was based, any of which may be material;

 

   

the fact that Velodyne stockholders will not be entitled to appraisal rights in connection with the mergers;

 

   

the transaction costs and retention costs to be incurred in connection with the proposed merger, regardless of whether the proposed mergers are completed; and

 

   

the risks of the type and nature described under “Risk Factors” and the matters described under “Cautionary Statement Regarding Forward-Looking Statements.”

The Velodyne board of directors considered the factors described above as a whole, including through engaging in discussions with Velodyne senior management and Velodyne’s outside legal and financial advisors. Based on this review and consideration, the Velodyne board of directors unanimously concluded that these factors, on balance, supported a determination that the terms of the merger agreement and the transactions contemplated thereby were advisable, fair to and in the best interests of Velodyne and its stockholders, and to make its recommendation to Velodyne stockholders that they vote to adopt the merger agreement.

In considering the recommendation of the Velodyne board of directors that Velodyne stockholders vote to adopt the merger agreement, Velodyne stockholders should be aware that Velodyne directors and executive officers may have certain interests in the mergers that are different from, or in addition to, the interests of Velodyne stockholders generally, including the treatment of equity awards held by such directors and executive officers in the mergers, as described under “Interests of Velodyne’s Directors and Executive Officers in the Mergers.” The Velodyne board of directors was aware of and took these interests into account when approving the merger agreement and determining that the terms of the merger agreement and the transactions contemplated thereby were advisable, fair to and in the best interests of Velodyne and its stockholders.

 

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The foregoing discussion of the information and factors that the Velodyne board of directors considered is not, and is not intended to be, exhaustive. The Velodyne board of directors collectively reached the conclusion to approve the merger agreement and the consummation of the transactions contemplated thereby, including the mergers, in light of the various factors described above and other factors that the Velodyne board of directors believed were appropriate. In view of the complexity and wide variety of factors, both positive and negative, that the Velodyne board of directors considered in connection with its evaluation of the mergers, the Velodyne board of directors did not find it useful to, and did not attempt, to quantify, rank or otherwise assign relative or specific weights or values to any of the factors it considered in reaching its decision and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Velodyne board of directors. In considering the factors discussed above, individual directors may have given different weights to different factors.

The foregoing discussion of the information and factors considered by the Velodyne board of directors in approving the merger agreement is forward-looking in nature. This information should be read in light of the factors discussed under “Cautionary Statement Regarding Forward-Looking Statements.”

Opinion of Barclays, Ouster’s Financial Advisor

Ouster engaged Barclays to act as its financial advisor with respect to a potential combination of Ouster and Velodyne, pursuant to an engagement letter dated September 16, 2022. On November 4, 2022, Barclays rendered its oral opinion (which was subsequently confirmed in writing) to the Ouster board of directors that, as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, the exchange ratio to be paid by Ouster in the mergers was fair, from a financial point of view, to Ouster.

The full text of Barclays’ written opinion, dated as of November 4, 2022, is attached as Annex F to this joint proxy statement/prospectus. Barclays’ written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by Barclays in rendering its opinion. You are encouraged to read the opinion carefully in its entirety. The following is a summary of Barclays’ opinion and the methodology that Barclays used to render its opinion. This summary is qualified in its entirety by reference to the full text of the opinion.

Barclays’ opinion, the issuance of which was approved by Barclays’ Fairness Opinion Committee, is addressed to the board of directors of Ouster, addresses only the fairness, from a financial point of view, of the exchange ratio to be paid by Ouster in the mergers and does not constitute a recommendation to any stockholder of Ouster as to how such stockholder should vote with respect to the mergers or any other matter. The terms of the mergers were determined through arm’s-length negotiations between Ouster and Velodyne and were unanimously approved by the Ouster board of directors and the Velodyne board of directors. Barclays did not recommend any specific form of consideration to Ouster or that any specific form of consideration constituted the only appropriate consideration for the mergers. Barclays was not requested to address, and its opinion does not in any manner address, Ouster’s underlying business decision to proceed with or effect the mergers, the likelihood of the consummation of the mergers, or the relative merits of the mergers as compared to any other transaction in which Ouster may engage. In addition, Barclays expressed no opinion on, and its opinion does not in any manner address, the fairness of the amount or the nature of any compensation to any officers, directors or employees of any parties to the mergers, or any class of such persons, relative to the consideration to be paid in the mergers. No limitations were imposed by Ouster board of directors upon Barclays with respect to the investigations made or procedures followed by it in rendering its opinion.

In arriving at its opinion, Barclays, among other things:

 

   

reviewed and analyzed a draft of the merger agreement, dated as of November 3, 2022 and the specific terms of the mergers;

 

   

reviewed and analyzed publicly available information concerning Ouster and Velodyne that Barclays believed to be relevant to its analysis, including Ouster’s Annual Report on Form 10-K for the fiscal

 

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year ended December 31, 2021, Ouster’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2022, Velodyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and Velodyne’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2022;

 

   

reviewed and analyzed financial and operating information with respect to the business, operations and prospects of Ouster furnished to Barclays by Ouster, including financial projections of Ouster prepared by Ouster’s management (including the Ouster Financial Forecasts (including the projected cash flows and financings included therein)) (the “Ouster Projections”);

 

   

reviewed and analyzed financial and operating information with respect to the business, operations and prospects of Velodyne furnished to Barclays by Velodyne, including financial projections of Velodyne prepared by management of Velodyne, as reviewed, extrapolated and approved for Barclays’ use by Ouster (including the projected cash flows and financings included therein) (the “Velodyne Projections”);

 

   

reviewed and analyzed financial projections of Ouster pro forma for the consummation of the mergers prepared by management of Ouster (including the Combined Company Financial Forecasts (including the projected cash flows and financings included therein)) (the “Ouster Pro Forma Projections”), including cost savings and operating synergies expected by management of Ouster to result from the combination of the businesses of Ouster and Velodyne (including the projected cash flows and financings included therein) (collectively, the “Expected Synergies”);

 

   

reviewed and analyzed a trading history of Ouster common stock from March 11, 2021 to November 3, 2022 and Velodyne common stock from March 11, 2021 to November 3, 2022 and a comparison of such trading history with those of other companies that Barclays deemed relevant;

 

   

reviewed and analyzed a comparison of the historical financial results and present financial condition of Ouster and Velodyne with each other and with those of other companies that Barclays deemed relevant;

 

   

reviewed and analyzed a comparison of the financial terms of the mergers with the financial terms of certain other recent transactions that Barclays deemed relevant;

 

   

reviewed and analyzed published estimates of independent research analysts with respect to the future financial performance and price targets of Ouster and Velodyne;

 

   

reviewed and analyzed the relative contributions of Ouster and Velodyne to the historical and future financial performance of the combined company on pro forma basis;

 

   

had discussions with each of the managements of Ouster and Velodyne concerning their respective business, operations, assets, liabilities, financial condition and prospects; and

 

   

has undertaken such other studies, analyses and investigations as Barclays deemed appropriate.

In arriving at its opinion, Barclays assumed and relied upon the accuracy and completeness of the financial and other information used by Barclays without any independent verification of such information (and had not assumed responsibility or liability for any independent verification of such information). Barclays also relied upon the assurances of management of Ouster that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the Ouster Projections, upon the advice and at the direction of Ouster, Barclays assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Ouster as to Ouster’s future financial performance and that Ouster would perform substantially in accordance with such projections, and Barclays relied on the Ouster Projections in arriving at its opinion. With respect to the Velodyne Projections, upon the advice and at the direction of Ouster, Barclays assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Ouster as to the future financial performance of Velodyne and that Velodyne would perform substantially in accordance with such projections, and Barclays relied on the Velodyne Projections in arriving at its opinion. With respect to the Ouster

 

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Pro Forma Projections, upon the advice and at the direction of Ouster, Barclays assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Ouster as to the future financial performance of the combined company pro forma for the consummation of the mergers and that the combined company would perform substantially in accordance with such projections, and Barclays relied on the Ouster Pro Forma Projections in arriving at its opinion. Furthermore, upon the advice and at the direction of Ouster, Barclays assumed that the amounts and timing of the Expected Synergies were reasonable and that the Expected Synergies would be realized in accordance with such estimates. In arriving at its opinion, Barclays assumed no responsibility for and expressed no view as to any such projections or estimates (including the Expected Synergies) or the assumptions on which they were based. In arriving at its opinion, Barclays did not conduct a physical inspection of the properties and facilities of Ouster or Velodyne and did not make or obtain any evaluations or appraisals of the assets or liabilities of Ouster or Velodyne. Barclays’ opinion was necessarily based upon market, economic and other conditions as they existed on, and could be evaluated as of, November 4, 2022. Barclays assumed no responsibility for updating or revising its opinion based on events or circumstances that may have occurred after, November 4, 2022.

Barclays assumed that the executed merger agreement would conform in all material respects to the last draft reviewed by Barclays. Additionally, Barclays assumed the accuracy of the representations and warranties contained in the merger agreement and all the agreements related thereto. Barclays also assumed, upon the advice of Ouster, that all material governmental, regulatory and third party approvals, consents and releases for the mergers would be obtained within the constraints contemplated by the merger agreement and that the mergers would be consummated in accordance with the terms of the merger agreement without waiver, modification or amendment of any material term, condition or agreement thereof. Barclays did not express any opinion as to any tax or other consequences that might result from the mergers, nor did Barclays’ opinion address any legal, tax, regulatory or accounting matters, as to which Barclays understood Ouster had obtained such advice as it deemed necessary from qualified professionals.

In connection with rendering its opinion, Barclays performed certain financial, comparative and other analyses as summarized below. In arriving at its opinion, Barclays did not ascribe a specific range of values to the shares of Ouster common stock but rather made its determination as to fairness, from a financial point of view, to Ouster of the exchange ratio to be paid by Ouster in the mergers on the basis of various financial and comparative analyses. The preparation of a fairness opinion is a complex process and involves various determinations as to the most appropriate and relevant methods of financial and comparative analyses and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to summary description.

In arriving at its opinion, Barclays did not attribute any particular weight to any single analysis or factor considered by it but rather made qualitative judgments as to the significance and relevance of each analysis and factor relative to all other analyses and factors performed and considered by it and in the context of the circumstances of the particular transaction. Accordingly, Barclays believes that its analyses must be considered as a whole, as considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion.

Summary of Material Financial Analyses

The following is a summary of the material financial analyses used by Barclays in preparing its opinion to the Ouster board of directors. The summary of Barclays’ analyses and reviews provided below is not a complete description of the analyses and reviews underlying Barclays’ opinion. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of analysis and review and the application of those methods to particular circumstances, and, therefore, is not readily susceptible to summary description.

 

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For the purposes of its analyses and reviews, Barclays made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Ouster, Velodyne or any other parties to the mergers. No company, business or transaction considered in Barclays’ analyses and reviews is identical to Ouster, Velodyne, Merger Sub I, Merger Sub II, or the proposed mergers, and an evaluation of the results of those analyses and reviews is not entirely mathematical. Rather, the analyses and reviews involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies, businesses or transactions considered in Barclays’ analyses and reviews. None of Ouster, Velodyne, Merger Sub I, Merger Sub II, Barclays or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses and reviews and the ranges of valuations resulting from any particular analysis or review are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of companies, businesses or securities do not purport to be appraisals or reflect the prices at which the companies, businesses or securities may actually be sold. Accordingly, the estimates used in, and the results derived from, Barclays’ analyses and reviews are inherently subject to substantial uncertainty.

The summary of the financial analyses and reviews provided below includes information presented in tabular format. In order to fully understand the financial analyses and reviews used by Barclays, 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 and reviews. Considering the data in the tables below without considering the full description of the analyses and reviews, including the methodologies and assumptions underlying the analyses and reviews, could create a misleading or incomplete view of Barclays’ analyses and reviews.

Selected Comparable Company Analysis

In order to assess how the public market values shares of similar publicly traded companies and to provide a range of relative implied equity values per share of Ouster common stock and per share of Velodyne common stock by reference to those companies, which could then be used to calculate implied exchange ratio ranges, Barclays reviewed and compared specific financial and operating data relating to Ouster and Velodyne, respectively, with selected companies that Barclays, based on its experience in the LIDAR, and broader mobility industry, deemed comparable to Ouster and Velodyne, respectively. The selected comparable companies with respect to Ouster and Velodyne were:

 

   

Luminar Technologies Inc.

 

   

Aeva Technologies, Inc.

 

   

Innoviz Technologies Ltd.

 

   

AEye, Inc.; and

 

   

Cepton Inc.

Barclays calculated and compared various financial multiples and ratios of Ouster and Velodyne and the selected comparable companies. As part of its selected comparable company analysis, Barclays calculated and analyzed each company’s ratio of enterprise value to projected revenue and gross profit. Enterprise value, revenue and gross profit calculations for the selected comparable companies were based on publicly available financial data, and closing prices, as of November 3, 2022, the last trading date prior to the delivery of Barclays’ opinion. The results of this selected comparable company analysis are summarized below:

 

     Mean      Median  

2024E Enterprise Value / Revenue

     2.7x        2.3x  

2025E Enterprise Value / Revenue

     1.2x        0.6x  

2024E Enterprise Value / Gross Profit

     10.3x        6.0x  

2025E Enterprise Value / Gross Profit

     3.1x        1.3x  

 

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Barclays selected the comparable companies listed above because their businesses and operating profiles are reasonably similar to that of Ouster or Velodyne, as applicable. However, because no selected comparable company is exactly the same as Ouster or Velodyne, as applicable, Barclays believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected comparable company analysis. Accordingly, Barclays also made qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of Ouster and Velodyne, as applicable and the selected comparable 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. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between Ouster and Velodyne, as applicable, and the companies included in the selected company analysis. Based upon these judgments, Barclays selected a range of multiples for each of Ouster and Velodyne consisting of (i) an enterprise value/2024E revenue multiple range of 2.0x-3.0x, (ii) an enterprise value/2025E revenue multiple range of 0.50x-1.50x, (iii) an enterprise value/2024E gross profit multiple range of 5.0x-7.0x and (iv) an enterprise value/2025E gross profit multiple range of 1.0x-3.0x and applied such range to the Ouster Projections and the Velodyne Projections to calculate a range of implied prices per share of Ouster common stock and Velodyne common stock, as applicable, which were then used to calculate a range of implied exchange ratios. The following table summarizes the result of these calculations, as compared to the exchange ratio in the mergers of 0.8204x:

 

     Selected Multiple
Range
     Implied Value Per
Share Ranges of
Ouster common
stock
     Implied Value Per
Share Ranges of
Velodyne
common stock
     Implied Range of
Exchange Ratios
 

2024E Enterprise Value / Revenue

     2.0x – 3.0x      $ 1.52 – $2.02      $ 1.93 – $2.38        0.64x – 1.04x  

2025E Enterprise Value / Revenue

     0.50x – 1.50x      $ 1.01 – $1.94      $ 1.34 – $1.95        0.52x – 1.45x  

2024E Enterprise Value / Gross Profit

     5.0x – 7.0x      $ 1.18 – $1.43      $ 1.25 – $1.54        0.77x – 1.14x  

2025E Enterprise Value / Gross Profit

     1.0x – 3.0x      $ 0.82 – $1.39      $ 0.74 – $1.13        0.73x – 1.88x  

Discounted Cash Flow Analysis

In order to estimate the present value of Ouster common stock and Velodyne common stock, Barclays performed a discounted cash flow analysis of each of Ouster and Velodyne. A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows of the asset. “Present value” refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts 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.

Ouster Standalone Valuation. To calculate the estimated enterprise value of Ouster using the discounted cash flow method, Barclays added (i) Ouster’s projected unlevered free cash flows for the stub period from November 3, 2022 through December 31, 2022, and for the fiscal years 2023 through 2025 in each case based on the Ouster Projections to (ii) the “terminal value” of Ouster as of December 31, 2026, and discounted such amount to its present value as of November 3, 2022 using a mid-year convention and range of selected discount rates. The projected unlevered free cash flows were calculated by taking the net operating profit after tax (including taxes for the stub period from November 3, 2022 through December 31, 2022) and adding the impact of depreciation and amortization and subtracting capital expenditures, the impact of stock based compensation and changes in net working capital. The residual value of Ouster at the end of the forecast period, or “terminal value,” was estimated by selecting a range of terminal value multiples based on next twelve months (“NTM”) exit revenue multiples for the fiscal year ending December 31, 2026 of 1.50x to 3.50x, which range was derived by Barclays utilizing its professional judgment and experience, taking into account the Ouster Projections, market expectations and comparable companies and applying such range to the Ouster Projections. The range of discount rates of 16% to 19% was selected based on an analysis of the weighted average cost of capital of Ouster.

Barclays then calculated a range of implied prices per share of Ouster common stock by (i) subtracting estimated net debt from and (ii) adding estimated cash to, in each case as of November 3, 2022, the estimated

 

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enterprise value calculated using the exit multiple method described above and dividing such amount by the fully diluted number of shares of Ouster common stock per the Ouster Financial Projections, which assumed an incremental share issuance of approximately 173 million shares of Ouster common stock. The ranges of enterprise values of Ouster standalone resulting from Barclays’ discounted cash flow analysis were $16 million to $395 million and the implied prices per share of Ouster common stock were $0.69 to $1.67 per share.

Velodyne Standalone Valuation. To calculate the estimated enterprise value of Velodyne using the discounted cash flow method, Barclays added (i) Velodyne’s unlevered free cash flows for the stub period from November 3, 2022 through December 31, 2022, and for the fiscal years 2023 through 2025 in each case based on the Velodyne Projections to (ii) the terminal value of Velodyne as of December 31, 2026, and discounted such amount to its present value as of November 3, 2022 using a mid-year convention and range of selected discount rates. The projected unlevered free cash flows were calculated by taking the net operating profit after tax (including taxes for the stub period from November 3, 2022 through December 31, 2022) and adding the impact of depreciation and amortization and subtracting capital expenditures, the impact of stock based compensation and changes in net working capital. The terminal value of Velodyne was estimated by selecting a range of terminal value multiples based on NTM exit revenue multiples for the fiscal year ending December 31, 2026 of 1.50x to 3.50x, which range was derived by Barclays utilizing its professional judgment and experience, taking into account the Velodyne Projections, market expectations and comparable companies and applying such range to the Velodyne Projections. The range of discount rates of 16% to 19% was selected based on an analysis of the weighted average cost of capital of Velodyne.

Barclays then calculated a range of implied prices per share of Velodyne common stock by (i) subtracting estimated net debt from and (ii) adding estimated cash to, in each case as of November 3, 2022, the estimated enterprise value calculated using the exit multiple method described above and dividing such amount by the fully diluted number of shares of Velodyne common stock per the Velodyne Financial Projections, which assumed an incremental share issuance of approximately 16 million shares of Velodyne common stock. The ranges of enterprise values of Velodyne standalone resulting from Barclays’ discounted cash flow analysis were ($43) million to $167 million and the implied prices per share of Velodyne common stock were $0.70 to $1.46 per share.

Based on the range of implied equity values per share calculated in the Ouster discounted cash flow analysis and Velodyne discounted cash flow analysis, Barclays calculated a range of implied exchange ratios for shares of Ouster common stock to shares of Velodyne common stock. This analysis resulted in a range of implied exchange ratios from 0.47x to 2.40x, as compared to the Exchange Ratio in the mergers of 0.8204x.

Has/Gets Analysis. Barclays also reviewed and compared the implied prices per share of Ouster common stock on a stand-alone basis as calculated in the discounted cash flow analysis described above to the implied prices per share of common stock of the combined company pro forma for the consummation of the mergers.

To calculate the estimated enterprise value of the combined company pro forma for the mergers using the discounted cash flow method, Barclays added (i) the combined company’s unlevered free cash flows for the stub period from November 3, 2022 through December 31, 2022, and for the fiscal years 2023 through 2025 in each case based on the Ouster Pro Forma Projections to (ii) the terminal value of the combined company as of December 31, 2026, and discounted such amount to its present value as of November 3, 2022 using a mid-year convention and range of selected discount rates. The projected unlevered free cash flows were calculated by taking the net operating profit after tax (including taxes for the stub period from November 3, 2022 through December 31, 2022) and adding the impact of depreciation and amortization and subtracting capital expenditures, the impact of stock based compensation and changes in net working capital. The terminal value of the combined company was estimated by selecting a range of terminal value multiples based on NTM exit revenue multiples for the fiscal year ending December 31, 2026 of 1.50x to 3.50x, which range was derived by Barclays utilizing its professional judgment and experience, taking into account the Ouster Pro Forma Projections, market expectations and comparable companies and applying such range to the Ouster Pro Forma Projections. The range of discount rates of 16% to 19% was selected based on an analysis of the weighted average cost of capital of the combined company.

 

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Barclays then calculated a range of implied prices per share of common stock of the combined company by (i) subtracting estimated net debt from and (ii) adding estimated cash to, in each case as of November 3, 2022, the estimated enterprise value calculated using the exit multiple method described above and dividing such amount by the fully diluted number of shares of the combined company common stock per the Ouster Pro Forma Financial Projections. The ranges of enterprise values of the combined company resulting from Barclays’ discounted cash flow analysis were $119 million to $636 million and the implied prices per share of common stock of the combined company were $1.07 to $2.28 per share, as compared to the implied prices per share of Ouster common stock on a standalone basis which were $0.69 to $1.67 per share.

General

Barclays is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. The Ouster board of directors selected Barclays because of its familiarity with Ouster and its qualifications, reputation and experience in the valuation of businesses and securities in connection with mergers and acquisitions generally, as well as substantial experience in transactions comparable to the mergers.

Barclays is acting as financial advisor to Ouster in connection with the proposed transaction. As compensation for its services in connection with the proposed transaction, Ouster paid Barclays a fee of $1,000,000 upon the delivery of Barclays’ opinion, which is referred to as the “Opinion Fee”. The Opinion Fee was not contingent upon the conclusion of Barclays’ opinion or the consummation of the proposed transaction. Additional compensation of $4,000,000 will be payable on completion of the proposed transaction against which the amounts paid for the opinion will be credited. In addition, Ouster has agreed to reimburse Barclays for a portion of its reasonable out-of-pocket expenses incurred in connection with the mergers and to indemnify Barclays for certain liabilities that may arise out of its engagement by Ouster and the rendering of Barclays’ opinion. Barclays has performed various investment banking and financial services for Ouster in the past, and expects to perform such services in the future, and has received, and expects to receive, customary fees for such services. Barclays has not received investment banking fees from Ouster or Velodyne in the past two years.

Barclays and its affiliates engage in a wide range of businesses from investment and commercial banking, lending, asset management and other financial and non-financial services. In the ordinary course of its business, Barclays and affiliates may actively trade and effect transactions in the equity, debt and/or other securities (and any derivatives thereof) and financial instruments (including loans and other obligations) of Ouster and Velodyne for its own account and for the accounts of its customers and, accordingly, may at any time hold long or short positions and investments in such securities and financial instruments.

Opinion of BofA Securities, Velodyne’s Financial Advisor

Velodyne retained BofA Securities to act as Velodyne’s financial advisor in connection with the mergers. BofA Securities is an internationally recognized investment banking firm which is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Velodyne selected BofA Securities to act as its financial advisor in connection with the mergers on the basis of BofA Securities’ experience in transactions similar to the mergers, its reputation in the investment community and its familiarity with Velodyne and its business.

On November 4, 2022, at a meeting of Velodyne’s board of directors held to evaluate the mergers, BofA Securities delivered to Velodyne’s board of directors an oral opinion, which was confirmed by delivery of a written opinion dated November 4, 2022, to the effect that, as of the date of the opinion and based on and subject to various assumptions and limitations described in its written opinion, the exchange ratio provided for in the first merger was fair, from a financial point of view, to holders of Velodyne common stock.

 

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The full text of BofA Securities’ written opinion to Velodyne’s board of directors, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex G to this document and is incorporated by reference herein in its entirety. The following summary of BofA Securities’ opinion is qualified in its entirety by reference to the full text of the opinion. BofA Securities delivered its opinion to Velodyne’s board of directors for the benefit and use of Velodyne’s board of directors (in its capacity as such) in connection with and for purposes of its evaluation of the exchange ratio from a financial point of view. BofA Securities’ opinion does not address any other term or aspect of the mergers and no opinion or view was expressed as to the relative merits of the mergers in comparison to other strategies or transactions that might be available to Velodyne or in which Velodyne might engage or as to the underlying business decision of Velodyne to proceed with or effect the mergers. BofA Securities’ opinion does not address any other aspect of the mergers and does not constitute a recommendation to any stockholder as to how to vote or act in connection with the proposed mergers or any related matter.

In connection with rendering its opinion, BofA Securities:

 

  (a)

reviewed certain publicly available business and financial information relating to Velodyne and Ouster;

 

  (b)

reviewed certain internal financial and operating information with respect to the business, operations and prospects of Velodyne furnished to or discussed with BofA Securities by the management of Velodyne, including certain financial forecasts relating to Velodyne prepared by the management of Velodyne and certain extrapolations thereto prepared by or at the direction and approved by the management of Velodyne, referred to herein as the Velodyne management forecasts;

 

  (c)

reviewed certain internal financial and operating information with respect to the business, operations and prospects of Ouster furnished to or discussed with BofA Securities by the management of Ouster, including certain financial forecasts relating to Ouster prepared by the management of Ouster, referred to herein as the Ouster management forecasts;

 

  (d)

reviewed certain extrapolations to the Ouster Forecasts prepared by or at the direction of and approved by the management of Velodyne, referred to herein as the extrapolated Ouster forecasts;

 

  (e)

reviewed certain estimates furnished to BofA Securities by the management of Velodyne as to the amount and timing of cost savings and revenue impacts anticipated by the management of Velodyne to result from the mergers, referred to herein collectively as the synergies;

 

  (f)

discussed the past and current business, operations, financial condition and prospects of Velodyne with members of senior management of Velodyne and Ouster, and discussed the past and current business, operations, financial condition and prospects of Ouster with members of senior management of Velodyne and Ouster;

 

  (g)

reviewed the potential pro forma financial impact of the mergers on the future financial performance of Ouster;

 

  (h)

reviewed the trading histories for Velodyne common stock and Ouster common stock and a comparison of such trading histories with each other;

 

  (i)

compared certain financial and stock market information of Velodyne and Ouster with similar information of other companies BofA Securities deemed relevant;

 

  (j)

reviewed the relative financial contributions of Velodyne and Ouster to the future financial performance of the combined company on a pro forma basis;

 

  (k)

reviewed a draft, dated November 3, 2022, of the merger agreement, referred to herein as the draft merger agreement; and

 

  (l)

performed such other analyses and studies and considered such other information and factors as BofA Securities deemed appropriate.

 

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In arriving at its opinion, BofA Securities assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with BofA Securities and relied upon the assurances of the managements of Velodyne and Ouster that they were not aware of any facts or circumstances that would make such information or data inaccurate or misleading in any material respect. With respect to the Ouster management forecasts, BofA Securities was advised by Ouster, and assumed with the consent of Velodyne, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Ouster as to the future financial performance of Ouster. With respect to the Velodyne management forecasts and the extrapolated Ouster forecasts, BofA Securities was advised by Velodyne, and assumed, with the consent of Velodyne, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Velodyne as to the future financial performance of Velodyne and Ouster, and BofA Securities relied, at the direction of Velodyne, on the Velodyne management forecasts, the Ouster management forecasts and the extrapolated Ouster forecasts for the purposes of the opinion. With respect to synergies, BofA Securities was advised by Velodyne, and assumed, with the consent of Velodyne, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Velodyne as to the matters covered thereby. BofA Securities relied, at the direction of Velodyne, on the assessments of the management of Velodyne as to Ouster’s ability to achieve the synergies and was advised by Velodyne, and assumed, with the consent of Velodyne, that the synergies will be realized in the amounts and at the times projected.

BofA Securities did not make or was not provided with any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Velodyne or Ouster, nor did it make any physical inspection of the properties or assets of Velodyne or Ouster. BofA Securities did not evaluate the solvency or fair value of Velodyne or Ouster under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. BofA Securities assumed, at the direction of Velodyne, that the mergers would be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the mergers, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on Velodyne, Ouster or the contemplated benefits of the mergers. BofA Securities also assumed that the mergers would qualify for federal income tax purposes as a reorganization under the provisions of Section 368(a) of the Code, as amended. BofA Securities also assumed, at the direction of Velodyne, that the final executed merger agreement would not differ in any material respect from the draft merger agreement reviewed by BofA Securities.

BofA Securities expressed no view or opinion as to any terms or other aspects of the mergers (other than the exchange ratio to the extent expressly specified in its opinion), including, without limitation, the form or structure of the mergers. BofA Securities was not requested to, and it did not, solicit indications of interest or proposals from third parties regarding a possible acquisition of all or any part of Velodyne or any alternative transaction. BofA Securities’ opinion was limited to the fairness, from a financial point of view, of the exchange ratio to the holders of Velodyne common stock and no opinion or view was expressed with respect to any consideration received in connection with the mergers by the holders of any class of securities, creditors or other constituencies of any party. In addition, no opinion or view was expressed with respect to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to any of the officers, directors or employees of any party to the mergers, or class of such persons, relative to the exchange ratio or otherwise. Furthermore, no opinion or view was expressed as to the relative merits of the mergers in comparison to other strategies or transactions that might be available to Velodyne or in which Velodyne might engage or as to the underlying business decision of Velodyne to proceed with or effect the mergers. BofA Securities did not express any view or opinion with respect to, and relied, with the consent of Velodyne, upon the assessments of representatives of Velodyne regarding, legal, regulatory, accounting, tax and similar matters relating to Velodyne, Ouster and the mergers (including the contemplated benefits thereof), as to which BofA Securities understood that Velodyne obtained such advice as it deemed necessary from qualified professionals. BofA Securities did not express any opinion as to what the value of Ouster common stock actually will be when issued

 

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or the prices at which Velodyne common stock or Ouster common stock will trade at any time, including following announcement or consummation of the mergers. In addition, BofA Securities expressed no opinion or recommendation as to how any stockholder should vote or act in connection with the mergers or any related matter. Except as described above, Velodyne imposed no other limitations on the investigations made or procedures followed by BofA Securities in rendering its opinion.

BofA Securities’ opinion was necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to BofA Securities as of, the date of its opinion. As the Velodyne board of directors was aware, the credit, financial and stock markets have been experiencing unusual volatility and BofA Securities expressed no opinion or view as to any potential effects of such volatility on Velodyne, Ouster or the mergers. It should be understood that subsequent developments may affect its opinion, and BofA Securities does not have any obligation to update, revise or reaffirm its opinion. The issuance of BofA Securities’ opinion was approved by a fairness opinion review committee of BofA Securities.

The discussion set forth below under “—Summary of Material Velodyne Financial Analyses,” “—Summary of Material Ouster Financial Analyses” and “—Summary of Material Relative Financial Analyses” represents a brief summary of the material financial analyses presented by BofA Securities to Velodyne’s board of directors in connection with its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses performed by BofA Securities, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses performed by BofA Securities. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by BofA Securities.

Summary of Material Velodyne Financial Analyses.

Selected Publicly Traded Companies Analysis. BofA Securities reviewed publicly available financial and stock market information for Velodyne and eight publicly traded companies in the Lidar (light detection and ranging) sector. The selected public companies and their respective calendar year 2024 multiples (as further described below) were as follows:

 

     Enterprise Value /
CY 2024E
Revenue
 

Aeva Technologies, Inc.

     0.20x  

AEye, Inc.

     0.20x  

Cepton, Inc.

     2.33x  

Innoviz Technologies Ltd.

     2.59x  

Luminar Technologies, Inc.

     8.05x  

MicroVision, Inc.

     1.79x  

Ouster, Inc.

     1.20x  

Quanergy Systems, Inc.

     NA  

BofA Securities reviewed, among other things, enterprise values of the selected publicly traded companies, calculated as equity values, based on closing stock prices on November 3, 2022, plus debt, and less cash and cash equivalents, as a multiple of calendar year 2024 estimated revenue. BofA Securities then applied calendar year 2024 revenue multiples of 0.20x to 1.80x derived from the selected publicly traded companies to Velodyne’s calendar year 2024 estimated revenue. Estimated financial data of the selected publicly traded companies were based on publicly available research analysts’ estimates, and estimated financial data of Velodyne were based on the Velodyne management forecasts.

 

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This analysis indicated the following approximate implied per share equity value reference range for Velodyne, as compared to the per share price of Velodyne common stock implied by the exchange ratio, based on the closing price of Ouster common stock on November 3, 2022:

 

Implied Per Share Equity Value Reference Range for Velodyne       

EV/CY2024E
Revenue

   Per Share Price
Implied by Exchange
Ratio
 

$0.92 – $1.51

   $  0.93  

No company used in this analysis is identical or directly comparable to Velodyne. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which Velodyne was compared.

Discounted Cash Flow Analysis. BofA Securities performed a discounted cash flow analysis of Velodyne to calculate the estimated present value of the standalone unlevered, after-tax free cash flows that Velodyne was forecasted to generate during Velodyne’s fourth quarter of fiscal year 2022 and fiscal years 2023 through 2032 based on the Velodyne management forecasts. BofA Securities calculated terminal values for Velodyne by applying to Velodyne’s estimated unlevered free cash flow in the terminal year a range of perpetuity growth rates of 2.5% to 3.5%, which perpetuity growth rates were selected based on BofA Securities’ professional judgment and experience and input from Velodyne management. The cash flows and terminal values were then discounted to present value, assuming a mid-year convention, as of September 30, 2022 using discount rates ranging from 12.5% to 16.0%, which were based on an estimate of Velodyne’s weighted average cost of capital. From the resulting enterprise values, BofA Securities added net cash of $220 million, as of September 30, 2022, to derive equity values.

This analysis indicated the following approximate implied per share equity value reference range for Velodyne as compared to the per share price of Velodyne common stock implied by the exchange ratio, based on the closing price of Ouster common stock on November 3, 2022:

 

Implied Per Share Equity
Value Reference Range for Velodyne

   Per Share Price
Implied by Exchange Ratio
 

$0.66 – $1.27

   $ 0.93  

Other Factors.

BofA Securities also noted certain additional factors that were not considered part of BofA Securities’ material financial analyses with respect to its opinion but were referenced for informational purposes, including, among other things, the following:

 

   

BofA Securities reviewed the trading range of Velodyne common stock for the 12-month period as of November 3, 2022, which was $0.83 to $7.83.

 

   

BofA Securities reviewed publicly available equity research analyst price targets for Velodyne common stock available as of November 3, 2022, and noted that the range of such price targets (discounted one year by 14.25% cost of equity) was $1.31 to $10.50 per share.

 

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Summary of Material Ouster Financial Analyses.

Selected Publicly Traded Companies Analysis. BofA Securities reviewed publicly available financial and stock market information for Ouster and eight publicly traded companies in the Lidar sector. The selected public companies and their respective calendar year 2024 multiples (as further described below) were as follows:

 

     Enterprise Value /
CY 2024E
Revenue
 

Aeva Technologies, Inc.

     0.20x  

AEye, Inc.

     0.20x  

Cepton, Inc.

     2.33x  

Innoviz Technologies Ltd.

     2.59x  

Luminar Technologies, Inc.

     8.05x  

MicroVision, Inc.

     1.79x  

Quanergy Systems, Inc.

     NA  

Velodyne Lidar Inc.

     0.15x  

BofA Securities reviewed, among other things, enterprise values of the selected publicly traded companies, calculated as equity values based on closing stock prices on November 3, 2022, plus debt, and less cash and cash equivalents, as a multiple of calendar year calendar year 2024 estimated revenue. BofA Securities then applied calendar year 2024 revenue multiples of 0.20x to 1.80x derived from the selected publicly traded companies to Ouster’s calendar year 2024 estimated revenue. Estimated financial data of the selected publicly traded companies were based on publicly available research analysts’ estimates, and estimated financial data of Ouster were based on the Ouster management forecasts.

This analysis indicated the following approximate implied per share equity value reference range for Ouster, as compared to the closing price of Ouster common stock on November 3, 2022:

 

Implied Per Share Equity Value Reference Range for Ouster       

EV/CY2024E
Revenue

   Closing Price of
Ouster on
November 3, 2022
 

$0.64 – $1.43

   $  1.13  

No company used in this analysis is identical or directly comparable to Ouster. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which Ouster was compared.

Discounted Cash Flow Analysis. BofA Securities performed a discounted cash flow analysis of Ouster to calculate the estimated present value of the standalone unlevered free cash flows that Ouster was forecasted to generate during Ouster’s fourth quarter of fiscal year 2022 and fiscal years 2023 through 2032 based on the Ouster management forecasts and the extrapolated Ouster forecasts. BofA Securities calculated terminal values for Ouster’s by applying to Ouster’s estimated unlevered cash flow in the terminal year a range of perpetuity growth rates of 2.5% to 3.5%, which perpetuity growth rates were selected based on BofA Securities’ professional judgment and experience and input from Velodyne management. The cash flows and terminal values were then discounted to present value, assuming a mid-year convention, as of September 30, 2022 using discount rates ranging from 12.5% to 16.0%, which were based on an estimate of Ouster’s weighted average cost of capital. From the resulting enterprise values, BofA Securities added net cash of $115 million, as of September 30, 2022, to derive equity values.

 

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This analysis indicated the following approximate implied per share equity value reference range for Ouster as compared to the closing price of Ouster common stock on November 3, 2022:

 

Implied Per Share Equity Value
Reference Range for Ouster

   Closing Price of
Ouster on
November 3, 2022
 

$0.28 – $1.08

   $ 1.13  

Other Factors.

BofA Securities also noted certain additional factors that were not considered part of BofA Securities’ material financial analyses with respect to its opinion but were referenced for informational purposes, including, among other things, the following:

 

   

BofA Securities reviewed the trading range of Ouster common stock for the 12-month period as of November 3, 2022, which was $0.76 to $7.95.

 

   

BofA Securities reviewed publicly available equity research analyst price targets for Ouster common stock available as of November 3, 2022, and noted that the range of such price targets (discounted one year by 14.25% cost of equity) was $1.75 to $6.13 per share.

Summary of Material Relative Financial Analyses.

Implied Exchange Ratio Analysis—Selected Companies Analysis. Utilizing the implied per share equity value reference ranges derived for Velodyne and Ouster described above under “—Selected Publicly Traded Companies Analysis” for each of Velodyne and Ouster, as applicable, by dividing the low endpoint and the high endpoint of the per share equity reference range derived for Velodyne by the high endpoint and low endpoint of the per share equity reference range derived for Ouster, respectively, BofA Securities calculated an approximate implied exchange ratio reference range. This analysis indicated the following approximate implied exchange ratio reference range, as compared to the exchange ratio:

 

Implied Exchange Ratio
EV/CY2024E
Revenue

   Mergers Exchange
Ratio
 

0.6471x – 2.3638x

     0.8204x  

Implied Exchange Ratio Analysis—Discounted Cash Flow Analysis. Utilizing the implied per share equity value reference ranges derived for Velodyne and Ouster described above under “—Discounted Cash Flow Analysis” for each of Velodyne and Ouster, as applicable, by dividing the low endpoint and the high endpoint of the per share equity reference range derived for Velodyne by the high endpoint and low endpoint of the per share equity reference range derived for Ouster, respectively, BofA Securities calculated approximate implied exchange ratio reference range. This analysis indicated the following approximate implied exchange ratio reference range, as compared to the exchange ratio:

 

Implied Exchange Ratio
Discounted Cash Flow Analysis

   Mergers Exchange
Ratio
 

0.6076x – 4.5426x

     0.8204x  

Has/Gets Analysis. BofA Securities performed a has/gets analysis to calculate the theoretical change in value for holders of Velodyne common stock resulting from the mergers based on a comparison of (i) the 100% ownership by holders of Velodyne common stock of Velodyne on a stand-alone basis and (ii) the pro forma ownership by holders of Velodyne common stock of Ouster after giving effect to the mergers.

For Velodyne common stock on a stand-alone basis, BofA Securities used the implied reference range indicated in its discounted cash flow analysis described above under “—Summary of Material Financial

 

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Analyses of Velodyne—Discounted Cash Flow Analysis.” BofA Securities then calculated the pro forma equity value per share of Velodyne common stock giving effect to the mergers by performing a pro forma discounted cash flow analysis of Ouster giving effect to the mergers to calculate the estimated present value of the unlevered free cash flows that Ouster was forecasted to generate during Ouster’s fourth quarter of fiscal year 2022 and fiscal years 2023 through 2032, based on the Velodyne management forecasts, the Ouster management forecasts, the extrapolated Ouster forecasts and the synergies. BofA Securities calculated terminal values for Ouster by applying to Ouster’s estimated unlevered cash flow in the terminal year, giving effect to the mergers and based on the Velodyne management forecasts, the Ouster management forecasts, the extrapolated Ouster forecasts and the synergies, a range of perpetuity growth rates of 2.5% to 3.5%. The cash flows and terminal values were then discounted to present value, assuming a mid-year convention, as of September 30, 2022, using discount rates ranging from 12.5% to 16.0%. From the resulting enterprise values, BofA Securities added net cash of $330 million, as of September 30, 2022, to derive equity values.

This analysis indicated the following approximate implied pro forma per share equity value reference range for Velodyne common stock giving effect to the mergers, based on the exchange ratio, for each share of Velodyne common stock, compared to the implied per share equity value for Velodyne common stock on a standalone basis:

 

     Per Share Equity
Value Reference
Ranges for Velodyne
Common Stock
 

Stand-Alone

   $ 0.66 – $1.27  

Pro Forma

   $ 1.23 – $2.08  

Other Factors.

BofA Securities also noted certain additional factors that were not considered part of BofA Securities’ material financial analyses with respect to its opinion but were referenced for informational purposes, including, among other things, the following:

 

   

Using the 12-month trading ranges for Velodyne common stock and Ouster common stock described above, BofA Securities calculated an approximate implied exchange ratio reference range of 0.1038x to 10.3013x, as compared to the exchange ratio in the first merger.

 

   

Using the publicly available equity research price targets for the Velodyne common stock and the Ouster common stock described above, BofA Securities calculated an approximate implied exchange ratio reference range of 0.2143x to 6.000x, as compared to the exchange ratio in the first merger.

Miscellaneous.

As noted above, the discussion set forth above under “—Summary of Material Velodyne Financial Analyses,” “—Summary of Material Ouster Financial Analyses” and “—Summary of Material Relative Financial Analyses” is a brief summary of the material financial analyses presented by BofA Securities to Velodyne’s board of directors in connection with its opinion and is not a comprehensive description of all analyses undertaken by BofA Securities in connection with its opinion. 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 partial analysis or summary description. BofA Securities believes that its analyses summarized above must be considered as a whole. BofA Securities further believes that selecting portions of its analyses and the factors considered or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying BofA Securities’ analyses and opinion. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.

 

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In performing its analyses, BofA Securities considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Velodyne and Ouster. The estimates of the future performance of Velodyne and Ouster in or underlying BofA Securities’ analyses are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those estimates or those suggested by BofA Securities’ analyses. These analyses were prepared solely as part of BofA Securities’ analysis of the fairness, from a financial point of view, of the exchange ratio and were provided to Velodyne’s board of directors in connection with the delivery of BofA Securities’ opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis described above are inherently subject to substantial uncertainty and should not be taken to be BofA Securities’ view of the actual values of Velodyne or Ouster.

The type and amount of consideration payable in the mergers was determined through negotiations between Velodyne and Ouster, rather than by any financial advisor, and was approved by Velodyne’s board of directors. The decision to enter into the merger agreement was solely that of Velodyne’s board of directors. As described above, BofA Securities’ opinion and analyses were only one of many factors considered by Velodyne’s board of directors in its evaluation of the proposed mergers and should not be viewed as determinative of the views of Velodyne’s board of directors or management with respect to the mergers or the exchange ratio.

Velodyne has agreed to pay BofA Securities for its services in connection with the mergers an aggregate fee of $4,600,000, $1,000,000 of which was payable in connection with its opinion and the remainder of which is payable immediately prior to or upon closing of the first merger. BofA Securities also will receive, upon the consummation of the first merger, payment of a fee for services rendered to Velodyne in connection with the merger of Velodyne with a subsidiary of Graf Industrial Corp., which fee the parties previously mutually agreed to defer until the consummation of the first merger. Velodyne also has agreed to reimburse BofA Securities for its expenses incurred in connection with BofA Securities’ engagement and to indemnify BofA Securities, any controlling person of BofA Securities and each of their respective directors, officers, employees, agents and affiliates against specified liabilities, including liabilities under the federal securities laws.

BofA Securities and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of their businesses, BofA Securities and its affiliates may invest on a principal basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in equity, debt or other securities or financial instruments (including derivatives, bank loans or other obligations) of Velodyne, Ouster and certain of their respective affiliates.

BofA Securities and its affiliates in the past have provided, currently are providing, and in the future may provide investment banking, commercial banking and other financial services to Velodyne and/or its affiliates and have received or in the future may receive compensation for the rendering of these services, including having acted as financial advisor to Velodyne in connection with the merger of Velodyne with a subsidiary of Graf Industrial Corp. From September 1, 2020 through September 30, 2022, BofA Securities and its affiliates derived aggregate revenues from Velodyne and its affiliates of approximately $20 million for investment banking services.

Certain Financial Forecasts Utilized in Connection with the Mergers

Velodyne Financial Forecasts

The unaudited prospective financial data presented below includes projections prepared by Velodyne management. Velodyne does not, as a matter of course, normally make public long-term projections or publicly

 

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disclose financial projections or forecasts as to future performances, revenues, earnings or other results given, among other things, the unpredictability of the underlying assumptions and estimates inherent in preparing financial projections and forecasts. As a result, Velodyne does not endorse unaudited prospective financial information as a reliable indication of future results.

In connection with the evaluation of the mergers, however, Velodyne management prepared the Velodyne management forecasts and other forecasts which are summarized in the below table. Velodyne is electing to provide the Velodyne management forecasts (as defined below) and other forecasts in this section of the joint proxy statement/prospectus to provide Velodyne and Ouster stockholders access to the Velodyne management forecasts that were made available to the Velodyne board and to the Ouster board, as well as their financial advisors, for purposes of considering and evaluating the mergers.

The Velodyne management forecasts and other forecasts in this section of the joint proxy statement/prospectus were prepared for internal use and reflect numerous estimates and assumptions with respect to matters such as future industry performance and competition, general business, economic, market and geopolitical conditions, and additional matters specific to Velodyne’s business, all of which are difficult to predict and many of which are beyond Velodyne’s control. The Velodyne management forecasts and other forecasts in this section of the joint proxy statement/prospectus thus reflect a substantial degree of uncertainty and are subject to periodic revisions based on actual experience and business developments.

Summary of the Financial Forecasts by Velodyne

In contemplation of the proposed mergers, in September 2022 Velodyne’s management prepared financial forecasts for Velodyne’s fiscal years 2022 through 2024 (which we refer to in this joint proxy statement/prospectus as the “September 2022 Velodyne management forecasts”). Velodyne’s management provided the September 2022 Velodyne management forecasts, together with certain extrapolations prepared by Velodyne management, to BofA Securities, and, on October 4, 2022, provided the September 2022 Velodyne management projections to Ouster , who subsequently shared the September 2022 Velodyne management projections with their financial advisor, Barclays.

In early November 2022, prior to the approval of the merger agreement by the Velodyne board of directors, Velodyne’s management revised the September 2022 Velodyne management forecasts (which revised forecasts we refer to in this joint proxy statement/prospectus as the “November 2022 Velodyne management forecasts”) to reflect updated forecasts of Velodyne management, including downward adjustments from the September 2022 Velodyne management forecasts for fiscal years 2022 through 2024 to account for, among other things, updated expectations of Velodyne management in light of Velodyne’s operating performance and anticipated product release timelines and assumptions with respect to its products’ market adoption. The revised management forecasts were intended to provide the Velodyne board of directors with the most current view of Velodyne’s management of Velodyne’s potential prospective financial performance in light of the foregoing as it considered the proposed transaction with Ouster. Velodyne’s management also prepared extrapolations of the November 2022 Velodyne management forecasts through fiscal year 2032 based on potential Velodyne longer-term initiatives, and provided the November 2022 Velodyne management forecasts, together with such extrapolations, to BofA Securities for purposes of their financial analyses.

In connection with consideration of the proposed transaction, Velodyne’s management, with input from Ouster management, also prepared an illustrative pro forma income statement for the combined company for fiscal years 2022 through 2025 (which we refer to in this joint proxy statement/prospectus as the “Velodyne management illustrative pro forma income statement”), selected metrics of which are summarized in the below table, along with extrapolations through fiscal year 2032, to reflect a possible combination of the companies and potential cost savings and revenue impacts anticipated by Velodyne management to result from the transaction. Velodyne’s management provided the Velodyne management illustrative pro forma income statement, together with such extrapolations, to the Velodyne board of directors for purposes of their consideration of the proposed transaction and to BofA Securities for purposes of their financial analyses.

 

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Velodyne management illustrative pro forma income statement

 

$mm

   2022E      2023E      2024E      2025E  

Revenue

   $ 95.5      $ 114.2      $ 166.5      $ 294.7  

Gross Profit

   $ (0.1    $ 33.5      $ 58.3      $ 103.9  

Opex

   $ 232.7      $ 161.5      $ 93.4      $ 102.2  

Velodyne management also prepared extrapolations through fiscal year 2032 for the Ouster Financial Forecasts (described below) and provided the Ouster Financial Forecasts, together with such extrapolations, to BofA Securities for purposes of their financial analyses.

On November 1, 2022, Velodyne’s management directed BofA Securities to use and rely upon the November 2022 Velodyne management forecasts (including the extrapolations described above), the Velodyne management illustrative pro forma income statement (including the extrapolations described above), and the Ouster Financial Forecasts (including the extrapolations described above) in connection with BofA Securities’ financial analyses and opinion. BofA Securities’ financial analyses and opinion are described under “The MergersOpinion of BofA Securities, Velodyne’s Financial Advisor” of this joint proxy statement/prospectus. Also on November 1, 2022, the revenue, gross profit, operating expenses and non-GAAP operating profit after tax components of the November 2022 Velodyne management forecasts, with respect to fiscal years 2022-2024, were provided to Barclays and subsequently shared by Barclays with Ouster.

The following table reflects selected metrics (in millions) included in the November 2022 Velodyne management forecasts:

 

     Fiscal Year Ending December 31,  

Velodyne Management Forecasts

   2022E      2023E      2024E  

Revenue(1)

   $ 51.0      $ 61.1      $ 95.3  

Non-GAAP Cost of Goods Sold(2)

   $ 64.0      $ 50.0      $ 65.1  

Gross Profit(3)

   $ (13.0    $ 11.1      $ 30.2  

Operating Expenses(4)

   $ 119.6      $ 106.8      $ 92.8  

Non-GAAP Operating Profit

   $ (132.6    $ (95.7    $ (62.6

(-) Tax

   $ 0.0      $ 0.0      $ 0.0  

Non-GAAP Operating Profit after Tax

   $ (132.6    $ (95.7    $ (62.6

(-) Tax-Effected SBC(5)

   $ (17.0    $ (15.9    $ (15.9

(+) Depreciation

   $ 7.4      $ 5.2      $ 4.8  

(+) / (-) Change in NWC(6)

   $ (7.2    $ (0.8    $ (3.1

(-) Capital Expenditures

   $ (5.7    $ (4.0    $ (4.0

Unlevered Free Cash Flow

   $ (155.1    $ (111.2    $ (80.8

Adjusted EBITDA(7)

   $ (125.2    $ (90.5    $ (57.8

 

(1)

September 2022 Velodyne management forecasts provided for the following approximate estimated revenue (in millions): 2022E: $51.0; 2023E: $61.1; 2024E: $110.3.

(2)

Non-GAAP Cost of Goods Sold represents Velodyne’s Cost of Goods Sold under Generally Accepted Accounting Principles, taking into account certain non-cash or non-operating items or unusual items, such as a discontinued product line, inventory reserves and losses related to a product transition, terminated contract expense, stock-based compensation and related employer payroll taxes. Velodyne management determined that such Non-GAAP measure was useful in evaluating Velodyne’s forecast.

(3)

September 2022 Velodyne management forecasts provided for the following approximate estimated gross profit (in millions): 2022E: $(12.9); 2023E: $11.1; 2024E: $35.0.

(4)

September 2022 Velodyne management forecasts provided for the following approximate estimated operating expenses (in millions): 2022E: $119.6; 2023E: $103.8; 2024E: $92.8.

 

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(5)

September 2022 Velodyne management forecasts provided for the following approximate estimated stock-based compensation figures (in millions): 2022E: $21.6; 2023E: $20.2; 2024E: $20.2.

(6)

September 2022 Velodyne management forecasts provided for the following approximate changes in working capital (in millions): 2022E: $(7.2); 2023E: $7.5; 2024E: $(14.4).

(7)

“Adjusted EBITDA” refers to earnings before interest, taxes, depreciation and amortization, and excludes stock-based compensation, restructuring and other costs, net, acquisition-related costs, net and certain other

  expenses that result from unplanned events outside the ordinary course of continuing operations or are infrequent in nature. Adjusted EBITDA is a non-GAAP measure, and Velodyne’s calculation of Adjusted EBITDA may differ from other companies. September 2022 Velodyne management forecasts provided for the following approximate estimated Adjusted EBITDA (in millions): 2022E: ($125.2); 2023E: ($87.5); 2024E: ($53.0E).

Ouster Financial Forecasts

The unaudited prospective financial data presented below includes projections prepared by Ouster management. Ouster does not, as a matter of course, normally make public long-term projections or publicly disclose financial projections or forecasts as to future performances, revenues, earnings or other results given, among other things, the unpredictability of the underlying assumptions and estimates inherent in preparing financial projections and forecasts. As a result, Ouster does not endorse unaudited prospective financial information as a reliable indication of future results.

In connection with the evaluation of the mergers, however, Ouster management prepared financial forecasts for Ouster’s fiscal years 2023 through 2025 (which we refer to in this joint proxy statement/prospectus as the Ouster Financial Forecasts), selected metrics of which are summarized in the below table. Ouster is electing to provide the Ouster Financial Forecasts in this section of the joint proxy statement/prospectus to provide Ouster stockholders access to the Ouster Financial Forecasts that were made available to the Ouster board, as well as Ouster’s financial advisor, for purposes of considering and evaluating the mergers. In the process of considering and evaluating the mergers, the core focus of the collaboration between the Ouster and Velodyne management teams was operating expenses, which is referred to as Opex.

The Ouster Financial Forecasts were prepared for internal use and reflect numerous estimates and assumptions with respect to matters such as future industry performance and competition, general business, economic, market and geopolitical conditions, and additional matters specific to Ouster’s business, all of which are difficult to predict and many of which are beyond Ouster’s control. The Ouster Financial Forecasts thus reflect a substantial degree of uncertainty and are subject to periodic revisions based on actual experience and business developments.

Ouster Financial Forecasts

 

$mm    2023E      2024E      2025E  

Revenue

   $ 65.3      $ 104.5      $ 198.6  

Gross Profit

   $ 18.4      $ 27.0      $ 59.9  

Opex

   $ 148.2      $ 137.5      $ 131.1  

In connection with the evaluation of the mergers, Ouster management prepared, with input from Velodyne management, pro forma financial forecasts for the combined company for fiscal years 2023 through 2025 (which we refer to in this joint proxy statement/prospectus as the Ouster Combined Company Financial Forecasts), selected metrics of which are summarized in the below table. Ouster is electing to provide the Ouster Combined Company Financial Forecasts in this section of the joint proxy statement/prospectus to provide Ouster stockholders access to the Ouster Combined Company Financial Forecasts that were made available to the Ouster board, as well as Ouster’s financial advisor, for purposes of considering and evaluating the mergers. In the process of considering and evaluating the mergers, the core focus of the collaboration between the Ouster and Velodyne management teams was Opex.

 

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Ouster Combined Company Financial Forecasts

 

$mm    2023E      2024E      2025E  

Revenue

   $ 98.7      $ 147.9      $ 271.6  

Gross Profit

   $ 26.7      $ 54.6      $ 112.9  

Opex

   $ 180.9      $ 132.0      $ 130.6  

Important Information About the Financial Forecasts

The November 2022 Velodyne management forecasts, the Velodyne management illustrative pro forma income statement, the Ouster Financial Forecasts and the Ouster Combined Company Financial Forecasts, which are collectively referred to as the Financial Forecasts, provide summary unaudited prospective financial information for Velodyne, Ouster, and the combined company. The Financial Forecasts were not prepared with a view toward public disclosure and the inclusion of such Financial Forecasts should not be regarded as an indication that any of Velodyne, Ouster, or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.

The Financial Forecasts were not prepared for purposes of public disclosure, nor were they prepared on a basis designed to comply with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of projections. However, in the view of Velodyne management and Ouster management, the Financial Forecasts were prepared on a reasonable basis, and reflect the best currently available estimates and judgments, and present, to the best of Velodyne management’s and Ouster management’s knowledge and belief, the expected course of action and the expected future financial performance of Velodyne and Ouster.

Ouster’s prospective financial information included in this document has been prepared by, and is the responsibility of, Ouster management. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying prospective financial information and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. PricewaterhouseCoopers LLP’s report as incorporated by reference in this document relates to Ouster’s previously issued financial statements. It does not extend to the prospective financial information and should not be read to do so.

Velodyne’s prospective financial information included in this document has been prepared by, and is the responsibility of, Velodyne management. KPMG has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying prospective financial information and, accordingly, KPMG does not express an opinion or any other form of assurance with respect thereto. KPMG’s report as incorporated by reference in this document relates to Velodyne’s previously issued financial statements. It does not extend to the prospective financial information and should not be read to do so.

Although presented with numerical specificity, the Financial Forecasts were prepared in accordance with variables, estimates, and assumptions that are inherently uncertain and may be beyond the control of Velodyne and Ouster, and which may prove not to have been, or to no longer be, accurate. While in the view of Velodyne and Ouster management the Financial Forecasts were prepared on a reasonable basis, the Financial Forecasts are subject to many risks and uncertainties. Important factors that may affect actual results and cause actual results to differ materially from the Financial Forecasts include risks and uncertainties relating to Velodyne’s and Ouster’s businesses, industry performance, the regulatory environment, general business and economic conditions, market and financial conditions, various risks set forth in Velodyne’s and Ouster’s reports filed with the SEC, and other factors described or referenced in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” of this joint proxy statement/prospectus.

 

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The Financial Forecasts also reflect assumptions that are subject to change and are susceptible to multiple interpretations and to conditions, transactions or events that may occur and were not anticipated at the time the Financial Forecasts were prepared. In addition, the Financial Forecasts do not take into account any circumstances, transactions or events occurring after the date the Financial Forecasts were prepared. Accordingly, actual results will likely differ, and may differ materially, from those contained in the Financial Forecasts. We do not assure you that the financial results in the Financial Forecasts set forth above will be realized or that future financial results of Velodyne or Ouster will not materially vary from those in the Financial Forecasts.

None of Velodyne, Ouster, or their respective affiliates, officers, directors, or other representatives gives any stockholder of Velodyne or Ouster, or any other person, any assurance that actual results will not differ materially from the Financial Forecasts, and, except as otherwise required by law, none of them undertakes any obligation to update or otherwise revise or reconcile the Financial Forecasts to reflect circumstances after the date the Financial Forecasts were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions and estimates underlying the Financial Forecasts are shown to be in error.

No one has made or makes any representation to a