424B3 1 d10549d424b3.htm 424B3 424B3
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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-251611

 

PROXY STATEMENT FOR

EXTRAORDINARY GENERAL MEETING OF

COLONNADE ACQUISITION CORP.

(A CAYMAN ISLANDS EXEMPTED COMPANY)

PROSPECTUS FOR

171,418,696 SHARES OF COMMON STOCK AND

10,000,000 REDEEMABLE WARRANTS

OF

COLONNADE ACQUISITION CORP.

(AFTER ITS DOMESTICATION AS A CORPORATION INCORPORATED IN THE

STATE OF DELAWARE),

THE CONTINUING ENTITY FOLLOWING THE DOMESTICATION,

WHICH WILL BE RENAMED “OUSTER, INC.” IN CONNECTION WITH THE BUSINESS COMBINATION DESCRIBED HEREIN

The board of directors of Colonnade Acquisition Corp., a Cayman Islands exempted company (“CLA” and, after the Domestication as described below, “Ouster PubCo”), has unanimously approved (1) the domestication of CLA as a Delaware corporation (the “Domestication”); (2) the merger of Beam Merger Sub, Inc. (“Merger Sub”), a Delaware corporation and direct wholly owned subsidiary of CLA, with and into Ouster, Inc. (which will be renamed Ouster Technologies, Inc. prior to the consummation of the Business Combination, “Ouster”), a Delaware corporation (the “Merger”, and, together with the Domestication, the “Business Combination”), with Ouster surviving the Merger as a wholly owned subsidiary of Ouster PubCo, pursuant to the terms of the Agreement and Plan of Merger, dated as of December 21, 2020, by and among CLA, Merger Sub and Ouster, attached to this proxy statement/prospectus as Annex A (the “Merger Agreement”), as more fully described elsewhere in this proxy statement/prospectus; and (3) the other transactions contemplated by the Merger Agreement and documents related thereto. In connection with the Business Combination, CLA will change its name to “Ouster, Inc.”

As a result of and upon the effective time of the Domestication, (1) each of the then issued and outstanding 5,000,000 Class B ordinary shares, par value $0.0001 per share, of CLA (the “CLA Class B ordinary shares”) will convert automatically, on a one-for-one basis, into a CLA Class A ordinary share (as defined below), (2) immediately following the conversion described in clause (1), each of the then issued and outstanding 25,000,000 Class A ordinary shares, par value $0.0001 per share, of CLA (the “CLA Class A ordinary shares”), will convert automatically, on a one-for-one basis, into a share of common stock, par value $0.0001 per share, of Ouster PubCo (the “Ouster PubCo common stock”), (3) each of the then issued and outstanding 10,000,000 redeemable warrants of CLA (the “CLA warrants”) will convert automatically into a redeemable warrant to purchase one share of Ouster PubCo common stock (the “Ouster PubCo warrants”) pursuant to the Warrant Agreement, dated August 20, 2020 (the “Warrant Agreement”), between CLA and Continental Stock Transfer & Trust Company (“Continental”), as warrant agent, and (4) each of the then issued and outstanding units of CLA that have not been previously separated into the underlying CLA Class A ordinary shares and underlying CLA warrants upon the request of the holder thereof (the “CLA units”), will be cancelled and will entitle the holder thereof to one share of Ouster PubCo common stock and one-half of one Ouster PubCo warrant, and (5) each of the then issued and outstanding 6,000,000 private placement warrants of CLA will convert automatically into an Ouster PubCo warrant pursuant to the Warrant Agreement. No fractional Ouster PubCo warrants will be issued upon separation of the CLA units. Accordingly, this proxy statement/prospectus covers the 20,000,000 shares of Ouster PubCo common stock and 10,000,000 Ouster PubCo warrants to be issued in the Domestication in respect of the CLA Class A ordinary shares and CLA warrants which were initially included in the CLA Units sold in CLA’s initial public offering.

As a result of and upon the Closing (as defined below), among other things, all outstanding shares of Ouster Capital Stock (after giving effect to the Ouster Warrant Settlement (as defined below), as more fully described elsewhere in this proxy statement/prospectus) as of immediately prior to the effective time of the Merger, and, together with shares of Ouster common stock reserved in respect of Ouster Awards (as defined below and as described further in the immediately succeeding paragraph) outstanding as of immediately prior to the Closing that will be converted into awards based on Ouster PubCo common stock, will be cancelled in exchange for the right to receive, or the reservation of, an aggregate of 150,000,000 shares of Ouster PubCo common stock (at a deemed value of $10.00 per share) or, as applicable, shares underlying awards based on Ouster PubCo common stock, representing a fully-diluted pre-transaction equity value of Ouster of $1.5 billion (the “Aggregate Merger Consideration”). The portion of the Aggregate Merger Consideration reflecting the conversion of the Ouster Awards is calculated assuming that all Ouster PubCo Options are net-settled (although Ouster PubCo Options may by their terms be cash-settled, resulting in


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additional dilution). With respect to Ouster PubCo Options received in respect of Ouster Options that are outstanding immediately prior to the Closing and cash exercised after the Closing, up to 26,222,695 additional shares of Ouster PubCo common stock may be issued. Accordingly, this proxy statement/prospectus also relates to the issuance by Ouster PubCo of 125,196,001 shares of Ouster PubCo common stock issued in connection with the Merger described herein. In addition, this proxy statement/prospectus relates to the resale of such shares of Ouster PubCo common stock. The holders of these shares may from time to time sell, transfer or otherwise dispose of any or all of these shares in a number of different ways and at varying prices, and we will not receive any proceeds from such transactions.

With respect to the Ouster Awards, all (i) options to purchase shares of Ouster common stock (“Ouster Options”) and (ii) restricted shares of Ouster common stock (“Ouster Restricted Stock”) outstanding as of immediately prior to the Merger (together, the “Ouster Awards”) will be converted into (a) options to purchase shares of Ouster PubCo common stock (“Ouster PubCo Options”) and (b) restricted shares of Ouster PubCo common stock (“Ouster PubCo Restricted Stock”), respectively. Accordingly, this proxy statement/prospectus also relates to the issuance by Ouster PubCo of 6,353,959 Ouster PubCo Restricted Stock in the Merger and 26,222,695 shares of Ouster PubCo common stock upon the exercise of the Ouster PubCo Options following the Merger. This proxy statement/prospectus also relates to the resale of 26,222,695 shares of Ouster PubCo common stock acquired pursuant to the exercise of the Ouster Options (the “Resale Shares”). The holders of the Resale Shares may from time to time sell, transfer or otherwise dispose of any or all of their Resale Shares in a number of different ways and at varying prices, and we will not receive any proceeds from such transactions. See “BCA Proposal—Consideration—Treatment of Ouster Options and Restricted Stock.”

The CLA units, CLA Class A ordinary shares and CLA warrants are currently listed on the New York Stock Exchange (the “NYSE”) under the symbols “CLA.U,” “CLA” and “CLA WS,” respectively. CLA will apply for listing, to be effective at the time of the Business Combination, of Ouster PubCo common stock and Ouster PubCo Warrants on the NYSE under the proposed symbols “OUST” and “OUST WS”, respectively. Ouster PubCo will not have units traded.

CLA will hold an extraordinary general meeting (the “extraordinary general meeting”) to consider matters relating to the Business Combination at 10:00 am, Eastern Time, on March 9, 2021. For the purposes of Cayman Islands law and the amended and restated memorandum and articles of association of CLA, the physical location of the extraordinary general meeting shall be at the offices of White & Case LLP at 1221 Avenue of the Americas, New York, New York 10020, or you or your proxyholder will be able to attend and vote at the extraordinary general meeting online by visiting https://www.cstproxy.com/colonnadeacquisition/sm2021 and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the extraordinary general meeting, registered shareholders and beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in the accompanying proxy statement/prospectus.

If you have any questions or need assistance voting your common stock, please contact Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing CLA.info@investor.morrowsodali.com. The notice of the extraordinary general meeting and the proxy statement/prospectus relating to the Business Combination will be available at https://www.cstproxy.com/colonnadeacquisition/sm2021.

This proxy statement/prospectus provides shareholders of CLA with detailed information about the proposed Business Combination and other matters to be considered at the extraordinary general meeting of CLA. We encourage you to read this entire document, including the Annexes and other documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described under the heading “Risk Factors beginning on page 55 of this proxy statement/prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

This proxy statement/prospectus is dated February 12, 2021 , and

is first being mailed to CLA’s shareholders on or about February 18, 2021.


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COLONNADE ACQUISITION CORP.

A Cayman Islands Exempted Company

(Company Number 363230)

1400 Centrepark Blvd, Ste 810

West Palm Beach, FL 33401

Dear Colonnade Acquisition Corp. Shareholders:

You are cordially invited to attend the extraordinary general meeting (the “extraordinary general meeting”) of Colonnade Acquisition Corp., a Cayman Islands exempted company (“CLA” and, after the Domestication, as described below, “Ouster PubCo”), at 10:00 am, Eastern Time, on March 9, 2021. For the purposes of Cayman Islands law and the amended and restated memorandum and articles of association of CLA (as may be amended from time to time, the “Cayman Constitutional Documents”), the physical location of the extraordinary general meeting shall be at the offices of White & Case LLP at 1221 Avenue of the Americas, New York, New York 10020, or you or your proxyholder will be able to attend and vote at the extraordinary general meeting online by visiting https://www.cstproxy.com/colonnadeacquisition/sm2021 and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the extraordinary general meeting, registered shareholders and beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in the accompanying proxy statement/prospectus.

At the extraordinary general meeting, CLA shareholders will be asked to consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger, dated as of December 21, 2020 (as the same may be amended, the “Merger Agreement”), by and among CLA, Beam Merger Sub, Inc. (“Merger Sub”), a Delaware corporation and direct wholly owned subsidiary of CLA, and Ouster, Inc. (“Ouster”), a Delaware corporation. a copy of which is attached to the accompanying proxy statement/prospectus as Annex A (the “BCA Proposal”). The Merger Agreement provides for, among other things, following the Domestication of CLA to Delaware as described below, the merger of Merger Sub with and into Ouster (the “Merger”), with Ouster surviving the Merger as a wholly owned subsidiary of Ouster PubCo, in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in the accompanying proxy statement/prospectus.

As a condition to the consummation of the Merger, the board of directors of CLA has unanimously approved a change of CLA’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication” and, together with the Merger, the “Business Combination”). As described in this proxy statement/prospectus, you will be asked to consider and vote upon a proposal to approve the Domestication (the “Domestication Proposal”). In connection with the consummation of the Business Combination, CLA will change its name to “Ouster, Inc.”

As a result of and upon the effective time of the Domestication, (1) each of the then issued and outstanding 5,000,000 Class B ordinary shares, par value $0.0001 per share, of CLA (the “CLA Class B ordinary shares”) will convert automatically, on a one-for-one basis, into a CLA Class A ordinary share (as defined below), (2) immediately following the conversion described in clause (1), each of the then issued and outstanding 25,000,000 Class A ordinary shares, par value $0.0001 per share, of CLA (the “CLA Class A ordinary shares”), will convert automatically, on a one-for-one basis, into a share of common stock, par value $0.0001 per share, of Ouster PubCo (the “Ouster PubCo common stock”), (3) each of the then issued and outstanding 10,000,000 redeemable warrants of CLA (the “CLA warrants”) will convert automatically into a redeemable warrant to purchase one share of Ouster PubCo common stock (the “Ouster PubCo warrants”) pursuant to the Warrant Agreement, dated August 20, 2020 (the “Warrant Agreement”), between CLA and Continental Stock Transfer & Trust Company (“Continental”), as warrant agent, and (4) each of the then issued and outstanding units of CLA that have not been previously separated into the underlying CLA Class A ordinary shares and underlying CLA warrants upon the request of the holder thereof (the “CLA units”), will be cancelled and will entitle the holder thereof to one share of Ouster PubCo common stock and one-half of one Ouster PubCo warrant, and (5) each of


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the then issued and outstanding 6,000,000 private placement warrants of CLA will convert automatically into an Ouster PubCo warrant pursuant to the Warrant Agreement. No fractional Ouster PubCo warrants will be issued upon separation of the CLA units. As used herein, “public shares” shall mean the CLA Class A ordinary shares (including those that underlie the CLA units) that were registered pursuant to the Registration Statement on Form S-1 (333-240378) and the shares of Ouster PubCo common stock issued as a matter of law upon the conversion thereof on the effective date of the Domestication. For further details, see “Domestication Proposal.”

You will also be asked to consider and vote upon (1) a proposal to approve by ordinary resolution and adopt the Agreement and Plan of Merger, dated as of December 21, 2020 (the “Merger Agreement”), by and among CLA, Merger Sub and Ouster (the “BCA Proposal”), (2) a proposal to approve by special resolution the change of CLA’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication Proposal”), (3) a proposal to approve by special resolution the proposed new certificate of incorporation (“Proposed Certificate of Incorporation”) and the proposed new bylaws (“Proposed Bylaws”) of Colonnade Acquisition Corp. (the “Organizational Documents Proposal”), (4) seven separate proposals to approve by special resolution material differences between the Cayman Constitutional Documents and the Proposed Certificate of Incorporation and the Proposed Bylaws (collectively, the “Advisory Organizational Documents Proposals”), (5) a proposal to approve by ordinary resolution, for purposes of complying with the applicable provisions of NYSE Listing Rule 312.03, the issuance of Ouster PubCo common stock to (a) the PIPE Investors (as defined below), including the Sponsor Related PIPE Investor, pursuant to the PIPE Investment (each as defined in the accompanying proxy statement/prospectus) and (b) the Ouster Stockholders pursuant to the Merger Agreement (the “Stock Issuance Proposal”), (6) a proposal to approve by ordinary resolution and adopt the Ouster PubCo 2021 Incentive Award Plan (the “Incentive Award Plan Proposal”) and (7) a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting (the “Adjournment Proposal”). The Business Combination will be consummated only if the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Stock Issuance Proposal and the Incentive Award Plan Proposal (collectively, the “Condition Precedent Proposals”) are approved at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal and the Advisory Organizational Documents Proposals are not conditioned upon the approval of any other proposal. Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which each shareholder is encouraged to read carefully and in its entirety.

As a result of and upon the Closing, among other things, all outstanding shares of Ouster Capital Stock (after giving effect to the Ouster Warrant Settlement, as more fully described elsewhere in this proxy statement/prospectus) as of immediately prior to the effective time of the Merger, and, together with shares of Ouster common stock reserved in respect of Ouster Awards outstanding as of immediately prior to the Closing that will be converted into awards based on Ouster PubCo common stock, will be cancelled in exchange for the right to receive an aggregate of 150,000,000 shares of Ouster PubCo common stock (at a deemed value of $10.00 per share), which, in the case of Ouster Awards, will be shares underlying awards based on Ouster PubCo common stock representing a fully-diluted pre-transaction equity value of Ouster of $1.5 billion (the “Aggregate Merger Consideration”). The portion of the Aggregate Merger Consideration reflecting the conversion of the Ouster Awards is calculated assuming that all Ouster PubCo Options are net-settled (although Ouster PubCo Options may by their terms be cash-settled, resulting in additional dilution).

 

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CLA has entered into subscription agreements (the “Subscription Agreements”) with certain institutional and accredited investors (the “PIPE Investors”), pursuant to which the PIPE Investors agreed to purchase, in the aggregate, 10,000,000 shares of Ouster PubCo common stock at $10.00 per share for an aggregate commitment amount of $100 million. The closings under the Subscription Agreements will occur substantially concurrently with the Closing. For additional information, see “BCA Proposal—Related Agreements—PIPE Subscription Agreements.”

Pursuant to the Cayman Constitutional Documents, a holder (a “public shareholder”) of public shares, which excludes shares held by the Sponsor, may request that CLA redeem all or a portion of such shareholder’s public shares for cash if the Business Combination is consummated. Holders of units must elect to separate the units into the underlying public shares and warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct it to do so. Public shareholders may elect to redeem their public shares even if they vote “for” the BCA Proposal or any other Condition Precedent Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers the certificates for its shares (if any) along with the redemption forms to Continental Stock Transfer & Trust Company, CLA’s transfer agent, Ouster PubCo will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of CLA’s initial public offering (the “trust account”), calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of September 30, 2020, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and, accordingly, it is shares of Ouster PubCo common stock that will be redeemed immediately after consummation of the Business Combination. See “Extraordinary General Meeting of CLA—Redemption Rights” in the accompanying proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

The Sponsor and each director and each officer of CLA have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, and to waive their redemption rights in connection with the consummation of the Business Combination with respect to any ordinary shares held by them, in the case of the Sponsor, subject also to the terms and conditions contemplated by the Sponsor Support Agreement, dated as of December 21, 2020, a copy of which is attached as Annex B to this proxy statement/prospectus (the “Sponsor Support Agreement”). The ordinary shares held by the Sponsor will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of the accompanying proxy statement/prospectus, the Sponsor (whose members include CLA’s directors and officers) owns 20% of the issued and outstanding ordinary shares.

The Merger Agreement provides that the obligations of Ouster to consummate the Merger are conditioned on, among other things, that as of the Closing, the amount of cash available in the trust account, after deducting the amount required to satisfy CLA’s obligations to its shareholders (if any) that exercise their rights to redeem their public shares pursuant to the Cayman Constitutional Documents plus the PIPE Investment Amount (as defined herein) actually received by CLA substantially concurrently with the Closing, is at least equal to

 

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$100.0 million. This condition is for the sole benefit of Ouster. If such condition is not met, and such condition is not or cannot be waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated. In addition, pursuant to the Cayman Constitutional Documents, in no event will CLA redeem public shares in an amount that would cause its net tangible assets to be less than $5,000,001.

The Merger Agreement is also subject to the satisfaction or waiver of certain other closing conditions as described in the accompanying proxy statement/prospectus (including the approval of the Merger Agreement and the transactions contemplated thereby, by the (i) affirmative vote or written consent of the holders of at least a majority of the voting power of the outstanding Ouster Capital Stock voting as a single class and on an as-converted basis and (ii) the affirmative vote or written consent of the holders of at least a majority of the voting power of the outstanding Ouster preferred stock voting as a single class and on an as-converted basis). There can be no assurance that the parties to the Merger Agreement would waive any such provision of the Merger Agreement.

The CLA units, CLA Class A ordinary shares and CLA warrants are currently listed on the New York Stock Exchange (the “NYSE”) under the symbols “CLA.U,” “CLA” and “CLA WS,” respectively. CLA will apply for listing, to be effective at the time of the Business Combination, of Ouster PubCo common stock and Ouster PubCo warrants on the NYSE under the proposed symbols “OUST” and “OUST WS”, respectively. Ouster PubCo will not have units traded. It is a condition of the consummation of the Business Combination that CLA receives confirmation from the NYSE that the securities have been approved for listing on the NYSE, but there can be no assurance such listing conditions will be met or that CLA will obtain such confirmation from the NYSE. If such listing conditions are not met or if such confirmation is not obtained, the Business Combination will not be consummated unless the NYSE listing condition set forth in the Merger Agreement is waived.

CLA is providing the accompanying proxy statement/prospectus and accompanying proxy card to CLA’s shareholders in connection with the solicitation of proxies to be voted at the extraordinary general meeting and at any adjournments of the extraordinary general meeting. Information about the extraordinary general meeting, the Business Combination and other related business to be considered by CLA’s shareholders at the extraordinary general meeting is included in the accompanying proxy statement/prospectus. Whether or not you plan to attend the extraordinary general meeting, all of CLA’s shareholders are urged to read the accompanying proxy statement/prospectus, including the Annexes and other documents referred to therein, carefully and in their entirety. You should also carefully consider the risk factors described under the heading “Risk Factors beginning on page 55 of this proxy statement/prospectus.

After careful consideration, the board of directors of CLA has unanimously approved the Business Combination and unanimously recommends that shareholders vote “FOR” adoption of the Merger Agreement, and approval of the transactions contemplated thereby, including the Business Combination, and “FOR” all other proposals presented to CLA’s shareholders in the accompanying proxy statement/prospectus. When you consider the recommendation of these proposals by the board of directors of CLA, you should keep in mind that CLA’s directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of CLA’s Directors and Executive Officers in the Business Combination” in the accompanying proxy statement/prospectus for a further discussion of these considerations.

The approval of each of the Domestication Proposal, the Organizational Documents Proposal and the Advisory Organizational Documents Proposals requires the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. The approval of each of the BCA Proposal, the Stock Issuance Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal require the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

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Your vote is very important. Whether or not you plan to attend the extraordinary general meeting, please vote as soon as possible by following the instructions in the accompanying proxy statement/prospectus to make sure that your shares are represented at the extraordinary general meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal and the Advisory Organizational Documents Proposals are not conditioned upon the approval of any other proposal set forth in the accompanying proxy statement/prospectus.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the extraordinary general meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the extraordinary general meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the extraordinary general meeting and will not be voted. An abstention or broker non-vote will be counted towards the quorum requirement but will not count as a vote cast at the extraordinary general meeting. If you are a shareholder of record and you attend the extraordinary general meeting and wish to vote in person, you may withdraw your proxy and vote in person.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES ARE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CLA’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE GENERAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

On behalf of CLA’s board of directors, I would like to thank you for your support and look forward to the successful completion of the Business Combination.

 

Sincerely,

/s/ Joseph S. Sambuco

Joseph S. Sambuco

Chairman of the Board of Directors

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

The accompanying proxy statement/prospectus is dated February 12, 2021 and is first being mailed to shareholders on or about February 18, 2021.

 

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COLONNADE ACQUISITION CORP.

A Cayman Islands Exempted Company

(Company Number 363230)

1400 Centrepark Blvd, Ste 810

West Palm Beach, FL 33401

NOTICE OF EXTRAORDINARY GENERAL MEETING

TO BE HELD ON MARCH 9, 2021

TO THE SHAREHOLDERS OF COLONNADE ACQUISITION CORP.:

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “extraordinary general meeting”) of Colonnade Acquisition Corp., a Cayman Islands exempted company, company number 363230 (“CLA”), will be held at 10:00 am, Eastern Time, on March 9, 2021. For the purposes of Cayman Islands law and the amended and restated memorandum and articles of association of CLA (the “Cayman Constitutional Documents”), the physical location of the extraordinary general meeting shall be at the offices of White & Case LLP at 1221 Avenue of the Americas, New York, New York 10020, or you or your proxyholder will be able to attend and vote at the extraordinary general meeting online by visiting https://www.cstproxy.com/colonnadeacquisition/sm2021 and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the extraordinary general meeting, registered shareholders and beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in this proxy statement/prospectus. You are cordially invited to attend the extraordinary general meeting, which will be held for the following purposes:

 

   

Proposal No. 1—The BCA Proposal—to consider and vote upon a proposal to approve by ordinary resolution and adopt the Agreement and Plan of Merger, dated as of December 21, 2020 (the “Merger Agreement”), by and among CLA, Merger Sub and Ouster, a copy of which is attached to this proxy statement/prospectus as Annex A. The Merger Agreement provides for, among other things, the merger of Merger Sub with and into Ouster (the “Merger”), with Ouster surviving the Merger as a wholly owned subsidiary of Ouster PubCo (as defined below), in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in this proxy statement/prospectus (the “BCA Proposal”);

 

   

Proposal No. 2—The Domestication Proposal—to consider and vote upon a proposal to approve by special resolution, the change of CLA’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication” and, together with the Merger, the “Business Combination”) (the “Domestication Proposal”);

 

   

Proposal No. 3—Organizational Documents Proposal—to consider and vote upon a proposal to approve by special resolution the proposed new certificate of incorporation (“Proposed Certificate of Incorporation”) and the proposed new bylaws (“Proposed Bylaws” and, together with the Proposed Certificate of Incorporation, the “Proposed Organizational Documents”) of Colonnade Acquisition Corp. (a corporation incorporated in the State of Delaware, and the filing with and acceptance by the Secretary of State of Delaware of the certificate of domestication in accordance with Section 388 of the Delaware General Corporation Law (the “DGCL”)), which will be renamed “Ouster, Inc.” in connection with the Business Combination (CLA after the Domestication, including after such change of name, is referred to herein as “Ouster PubCo”) (the “Organizational Documents Proposal”);

 

   

Proposal 4—Advisory Organizational Documents Proposals—to consider and vote upon the following seven separate proposals (collectively, the “Advisory Organizational Documents Proposals”)

 

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to approve by special resolution the following material differences between the Cayman Constitutional Documents”) and the Proposed Organizational Documents:

(A) Advisory Organizational Documents Proposal 4A—to authorize the change in the authorized capital stock of CLA from 200,000,000 Class A ordinary shares, par value $0.0001 per share (the “Class A ordinary shares”), 20,000,000 Class B ordinary shares, par value $0.0001 per share (the “Class B ordinary shares” and, together with the Class A ordinary shares, the “ordinary shares”), and 1,000,000 preference shares, par value $0.0001 per share (the “preference shares”), to 1,000,000,000 shares of common stock, par value $0.0001 per share, of Ouster PubCo (the “Ouster PubCo common stock”) and 100,000,000 shares of preferred stock, par value $0.0001 per share, of Ouster PubCo (the “Ouster PubCo preferred stock”) (“Advisory Organizational Documents Proposal 4A”);

(B) Advisory Organizational Documents Proposal 4B—to authorize adopting Delaware as the exclusive forum for certain stockholder litigation (“Advisory Organizational Documents Proposal 4B”);

(C) Advisory Organizational Documents Proposal 4C—to authorize electing not to be governed by Section 203 of the DGCL relating to takeovers by interested stockholders and, instead, be governed by a provision substantially similar to Section 203 of the DGCL (“Advisory Organizational Documents Proposal 4C”);

(D) Advisory Organizational Documents Proposal 4D—to approve provisions providing that the affirmative vote of at least two-thirds of the voting power of all the then outstanding shares of capital stock entitled to vote generally in the election of directors will be required for stockholders to (i) adopt, amend or repeal the Proposed Bylaws and (ii) amend, alter, repeal or rescind Articles V(B), VII, VIII, IX, X, XI, XII and XIII of the Proposed Certificate of Incorporation (“Advisory Organizational Documents Proposal 4D”);

(E) Advisory Organizational Documents Proposal 4E—to approve provisions permitting the removal of a director only for cause and only by the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote at an election of directors (“Advisory Organizational Documents Proposal 4E”);

(F) Advisory Organizational Documents Proposal 4F—to approve provisions requiring stockholders to take action at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting (“Advisory Organizational Documents Proposal 4F”);

(G) Advisory Organizational Documents Proposal 4G—to provide for certain additional changes, including, among other things, (i) changing the corporate name from “Colonnade Acquisition Corp.” to “Ouster, Inc.”, (ii) making Ouster PubCo’s corporate existence perpetual and (iii) removing certain provisions related to CLA’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which CLA’s board of directors believes is necessary to adequately address the needs of Ouster PubCo after the Business Combination (“Advisory Organizational Documents Proposal 4G”);

 

   

Proposal No. 5—The Stock Issuance Proposal—to consider and vote upon a proposal to approve by ordinary resolution for purposes of complying with the applicable provisions of NYSE Listing Rule 312.03, the issuance of Ouster PubCo common stock to the PIPE Investors, including the Sponsor Related PIPE Investor, pursuant to the PIPE Investment (the “Stock Issuance Proposal”);

 

   

Proposal No. 6—The Incentive Award Plan Proposal—to consider and vote upon a proposal to approve by ordinary resolution the Ouster PubCo 2021 Incentive Award Plan (the “Incentive Award Plan Proposal”);

 

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Proposal No. 7—The Adjournment Proposal—to consider and vote upon a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting (the “Adjournment Proposal”).

Each of Proposals No. 1 through 6 (excluding Proposals 4A through 4G) is cross-conditioned on the approval of each other. The Adjournment Proposal and the Advisory Organizational Documents Proposals are not cross-conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus.

These items of business are described in this proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting.

Only holders of record of ordinary shares at the close of business on February 8, 2021 are entitled to notice of and to vote at and to have their votes counted at the extraordinary general meeting and any adjournment of the extraordinary general meeting.

This proxy statement/prospectus and accompanying proxy card is being provided to CLA’s shareholders in connection with the solicitation of proxies to be voted at the extraordinary general meeting and at any adjournment of the extraordinary general meeting. Whether or not you plan to attend the extraordinary general meeting, all of CLA’s shareholders are urged to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described under the heading “Risk Factorsbeginning on page 55 of this proxy statement/prospectus.

After careful consideration, the board of directors of CLA has unanimously approved the Business Combination and unanimously recommends that shareholders vote “FOR” adoption of the Merger Agreement, and approval of the transactions contemplated thereby, including the Business Combination, and “FOR” all other proposals presented to CLA’s shareholders in this proxy statement/prospectus. When you consider the recommendation of these proposals by the board of directors of CLA, you should keep in mind that CLA’s directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of CLA’s Directors and Executive Officers in the Business Combination” in this proxy statement/prospectus for a further discussion of these considerations.

Pursuant to the Cayman Constitutional Documents, a holder of public shares (as defined herein) (a “public shareholder”) may request of CLA that Ouster PubCo redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a holder of public shares, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares;

 

  (ii)

submit a written request to Continental Stock Transfer & Trust Company (“Continental”), CLA’s transfer agent, that Ouster PubCo redeem all or a portion of your public shares for cash; and

 

  (iii)

deliver your certificates for public shares (if any) along with the redemption forms to Continental, CLA’s transfer agent, physically or electronically through The Depository Trust Company (“DTC”).

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 pm, Eastern Time, on March 5, 2021 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

 

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Holders of units must elect to separate the units into the underlying public shares and warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and warrants, or if a holder holds units registered in its own name, the holder must contact Continental, CLA’s transfer agent, directly and instruct them to do so. Public shareholders may elect to redeem public shares regardless of if or how they vote in respect of the BCA Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker or bank.

If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its shares to Continental, CLA’s transfer agent, Ouster PubCo will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of CLA’s initial public offering (the “trust account”), calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of September 30, 2020, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and, accordingly, it is shares of Ouster PubCo common stock that will be redeemed promptly after consummation of the Business Combination. See “Extraordinary General Meeting of CLA—Redemption Rights” in this proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

Colonnade Sponsor LLC, a Delaware limited liability company and shareholder of CLA (the “Sponsor”), and each director of CLA have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, and to waive their redemption rights in connection with the consummation of the Business Combination with respect to any ordinary shares held by them, in the case of the Sponsor, subject also to the terms and conditions contemplated by the Sponsor Support Agreement, dated as of December 21, 2020, a copy of which is attached to this proxy statement/prospectus as Annex B (the “Sponsor Support Agreement”). The ordinary shares held by the Sponsor will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of the accompanying proxy statement/prospectus, the Sponsor (whose members include CLA’s directors and officers) owns 20% of the issued and outstanding ordinary shares.

The Merger Agreement provides that the obligations of Ouster to consummate the Merger are conditioned on, among other things, that as of Closing, the amount of cash available in the trust account, after deducting the amount required to satisfy CLA’s obligations to its shareholders (if any) that exercise their rights to redeem their public shares pursuant to the Cayman Constitutional Documents (such amount, the “Trust Amount”) plus the PIPE Investment Amount (as defined herein) actually received by CLA substantially concurrently with the Closing, is at least equal to $100.0 million. This condition is for the sole benefit of Ouster. If such condition is not met, and such condition is not or cannot be waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated. In addition, pursuant to the Cayman Constitutional Documents, in no event will CLA redeem public shares in an amount that would cause its net tangible assets to be less than $5,000,001.

The Merger Agreement is also subject to the satisfaction or waiver of certain other closing conditions as described in the accompanying proxy statement/prospectus. There can be no assurance that the parties to the Merger Agreement would waive any such provision of the Merger Agreement.

 

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The approval of each of the Domestication Proposal, the Organizational Documents Proposal and the Advisory Organizational Documents Proposals requires the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. The approval of each of the BCA Proposal, the Stock Issuance Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

Your vote is very important. Whether or not you plan to attend the extraordinary general meeting, please vote as soon as possible by following the instructions in this proxy statement/prospectus to make sure that your shares are represented at the extraordinary general meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal and the Advisory Organizational Documents Proposals are not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the extraordinary general meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the extraordinary general meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the extraordinary general meeting and will not be voted. An abstention or broker non-vote will be counted towards the quorum requirement but will not count as a vote cast at the extraordinary general meeting. If you are a shareholder of record and you attend the extraordinary general meeting and wish to vote in person, you may withdraw your proxy and vote in person.

Your attention is directed to the remainder of the proxy statement/prospectus following this notice (including the Annexes and other documents referred to herein) for a more complete description of the proposed Business Combination and related transactions and each of the proposals. You are encouraged to read this proxy statement/prospectus carefully and in its entirety, including the Annexes and other documents referred to herein. If you have any questions or need assistance voting your ordinary shares, please contact Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200 or banks and brokers can call at (203) 658-9400, or by emailing CLA.info@investor.morrowsodali.com. This notice of extraordinary general meeting and the proxy statement/prospectus are available at https://www.cstproxy.com/colonnadeacquisition/sm2021.

Thank you for your participation. We look forward to your continued support.

By Order of the Board of Directors of Colonnade Acquisition Corp.,

February 18, 2021

 

/s/ Joseph S. Sambuco

Joseph S. Sambuco

Chairman of the Board of Directors

 

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TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES ARE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CLA’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE EXTRAORDINARY GENERAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

 

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TABLE OF CONTENTS

 

     Page  

REFERENCES TO ADDITIONAL INFORMATION

     1  

SELECTED DEFINITIONS

     2  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     6  

QUESTIONS AND ANSWERS FOR SHAREHOLDERS OF CLA

     8  

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

     26  

SELECTED HISTORICAL FINANCIAL INFORMATION OF CLA

     42  

SELECTED HISTORICAL FINANCIAL INFORMATION AND OPERATING DATA OF OUSTER

     43  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     46  

COMPARATIVE SHARE INFORMATION

     49  

MARKET PRICE AND DIVIDEND INFORMATION

     52  

RISK FACTOR SUMMARY

     53  

RISK FACTORS

     55  

EXTRAORDINARY GENERAL MEETING OF CLA

     101  

BCA PROPOSAL

     108  

DOMESTICATION PROPOSAL

     139  

ORGANIZATIONAL DOCUMENTS PROPOSAL

     142  

ADVISORY ORGANIZATIONAL DOCUMENTS PROPOSALS

     144  

STOCK ISSUANCE PROPOSAL

     152  

INCENTIVE AWARD PLAN PROPOSAL

     154  

ADJOURNMENT PROPOSAL

     162  

U.S. FEDERAL INCOME TAX CONSIDERATIONS

     163  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     177  

INFORMATION ABOUT CLA

     189  

CLA’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     198  

INFORMATION ABOUT OUSTER

     201  

OUSTER’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     221  

MANAGEMENT OF OUSTER PUBCO FOLLOWING THE BUSINESS COMBINATION

     242  

EXECUTIVE COMPENSATION

     248  

BENEFICIAL OWNERSHIP OF SECURITIES

     256  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     260  

COMPARISON OF CORPORATE GOVERNANCE AND SHAREHOLDER RIGHTS

     265  

DESCRIPTION OF OUSTER PUBCO SECURITIES

     267  

SECURITIES ACT RESTRICTIONS ON RESALE OF OUSTER PUBCO SECURITIES

     275  

SHAREHOLDER PROPOSALS AND NOMINATIONS

     276  

SHAREHOLDER COMMUNICATIONS

     278  

LEGAL MATTERS

     279  

EXPERTS

     280  

DELIVERY OF DOCUMENTS TO SHAREHOLDERS

     281  

ENFORCEABILITY OF CIVIL LIABILITY

     282  

WHERE YOU CAN FIND MORE INFORMATION

     283  

INDEX TO FINANCIAL STATEMENTS

     F-1  

 

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REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important information that is not included in or delivered with this proxy statement/prospectus. This information is available for you to review through the SEC’s website at www.sec.gov.

You may request copies of this proxy statement/prospectus or other information concerning CLA, without charge, by written request to Joseph S. Sambuco, Colonnade Acquisition Corp., 1400 Centrepark Blvd, Ste 810, West Palm Beach, FL 33401, or by telephone request at (516) 712-7860; or Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call at (203) 658-9400, or by emailing CLA.info@investor.morrowsodali.com, or from the SEC through the SEC website at the address provided above.

In order for you to receive timely delivery of the documents in advance of the extraordinary general meeting of CLA to be held on March 9, 2021, you must request the information no later than four business days prior to the date of the extraordinary general meeting, by March 3, 2021.

 

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SELECTED DEFINITIONS

Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, references to:

 

   

“2021 Plan” are to the Ouster PubCo 2021 Incentive Award Plan attached to this proxy statement/prospectus as Annex F;

 

   

“Business Combination” are to the Domestication together with the Merger;

 

   

“Cayman Constitutional Documents” are to CLA’s Amended and Restated Memorandum and Articles of Association attached to this proxy statement/prospectus as Annex G, as amended from time to time;

 

   

“Cayman Islands Companies Law” are to the Cayman Islands Companies Act (2020 Revision);

 

   

“CLA” are to Colonnade Acquisition Corp. prior to its domestication as a corporation in the State of Delaware;

 

   

“CLA Class A ordinary shares” are to CLA’s Class A ordinary shares, par value $0.0001 per share;

 

   

“CLA Class B ordinary shares” are to CLA’s Class B ordinary shares, par value $0.0001 per share;

 

   

“CLA units” and “units” are to the units of CLA, each unit representing one CLA Class A ordinary share and one-half of one redeemable warrant to acquire one CLA Class A ordinary share, that were offered and sold by CLA in its initial public offering and registered pursuant to the IPO registration statement (less the number of units that have been separated into the underlying public shares and underlying warrants upon the request of the holder thereof);

 

   

“Closing” are to the closing of the Business Combination;

 

   

“Company,” “we,” “us” and “our” are to CLA prior to its domestication as a corporation in the State of Delaware and to Ouster PubCo after its domestication as a corporation incorporated in the State of Delaware, including after its change of name to Ouster, Inc.;

 

   

“Condition Precedent Approvals” are to the approval at the extraordinary general meeting of the Condition Precedent Proposals;

 

   

“Condition Precedent Proposals” are to the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Stock Issuance Proposal and the Incentive Award Plan Proposal, collectively;

 

   

“Continental” are to Continental Stock Transfer & Trust Company;

 

   

“COVID-19 Measures” are to any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, safety or similar law, directive, guidelines or recommendations promulgated by any industry group or any governmental authority, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID-19, including the CARES Act and Families First Act;

 

   

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

 

   

“Domestication” are to the domestication of Colonnade Acquisition Corp. as a corporation incorporated in the State of Delaware;

 

 

   

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

 

   

“Exchange Ratio” are to the quotient obtained by dividing (i) 150,000,000 by (ii) the aggregate fully-diluted number of shares of Ouster common stock issued and outstanding immediately prior to the Merger;

 

   

“founder shares” are to the CLA Class B ordinary shares purchased by the Sponsor in a private placement prior to the initial public offering, and the CLA Class A ordinary shares that will be issued upon the conversion thereof;

 

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“GAAP” are to accounting principles generally accepted in the United States of America;

 

   

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

 

   

“initial public offering” are to CLA’s initial public offering that was consummated on August 25, 2020;

 

   

“IPO registration statement” are to the Registration Statement on Form S-1 (333-240378) filed by CLA in connection with its initial public offering, which became effective on August 20, 2020;

 

   

“IRS” are to the U.S. Internal Revenue Service;

 

   

“JOBS Act” are to the Jumpstart Our Business Startups Act of 2012;

 

   

“Merger” are to the merger of Merger Sub with and into Ouster, with Ouster surviving the merger as a wholly owned subsidiary of Ouster PubCo;

 

   

“NYSE” are to the New York Stock Exchange;

 

   

“Ouster” are to Ouster, Inc. prior to the Business Combination, which will become a wholly owned subsidiary of Ouster PubCo as a result of the Business Combination and change its name from Ouster, Inc. to Ouster Technologies, Inc.;

 

   

“Ouster Awards” are to Ouster Options and Ouster Restricted Stock;

 

   

“Ouster Capital Stock” are to shares of Ouster common stock and Ouster preferred stock.

 

   

“Ouster common stock” are to shares of Ouster common stock, par value $0.00001 per share;

 

   

“Ouster Holders Support Agreement” are to that certain Support Agreement, dated December 21, 2020, by and among Ouster, CLA, each officer and director of Ouster and certain other stockholders of Ouster as set forth therein attached to this proxy statement/prospectus as Annex C, as amended and modified from time to time;

 

   

“Ouster Options” are to options to purchase shares of Ouster common stock;

 

 

   

“Ouster preferred stock” are to shares of Series B redeemable convertible preferred stock of Ouster, par value $0.00001 per share.

 

   

“Ouster Restricted Stock” are to restricted shares of Ouster common stock;

 

   

“Ouster PubCo” are to CLA after the Domestication and its name change from Colonnade Acquisition Corp. to Ouster, Inc.;

 

   

“Ouster PubCo common stock” are to shares of Ouster PubCo common stock, par value $0.0001 per share;

 

   

“Ouster PubCo Options” are to options to purchase shares of Ouster PubCo common stock;

 

   

“Ouster PubCo Restricted Stock” are to restricted shares of Ouster PubCo common stock;

 

   

“ordinary shares” are to the CLA Class A ordinary shares and the CLA Class B ordinary shares, collectively;

 

   

“Person” are to any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, governmental authority or instrumentality or other entity of any kind;

 

   

“PIPE Investment” are to the purchase of shares of Ouster PubCo common stock pursuant to the Subscription Agreements;

 

   

“PIPE Investment Amount” are to the aggregate gross purchase price received by CLA prior to or substantially concurrently with Closing for the shares in the PIPE Investment;

 

   

“PIPE Investors” are to those certain institutional and accredited investors participating in the PIPE Investment pursuant to the Subscription Agreements;

 

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“private placement warrants” are to the CLA private placement warrants outstanding as of the date of this proxy statement/prospectus and the warrants of Ouster PubCo issued as a matter of law upon the conversion thereof at the time of the Domestication;

 

   

“pro forma” are to giving pro forma effect to the Business Combination and related transactions;

 

   

“Proposed Bylaws” are to the proposed bylaws of Ouster PubCo upon the effective date of the Domestication attached to this proxy statement/prospectus as Annex I;

 

   

“Proposed Certificate of Incorporation” are to the proposed certificate of incorporation of Ouster PubCo upon the effective date of the Domestication attached to this proxy statement/ prospectus as Annex H;

 

   

“Proposed Organizational Documents” are to the Proposed Certificate of Incorporation and the Proposed Bylaws;

 

   

“public shareholders” are to holders of public shares, whether acquired in CLA’s initial public offering or acquired in the secondary market;

 

   

“public shares” are to the CLA Class A ordinary shares (including those that underlie the units) that were offered and sold by CLA in its initial public offering and registered pursuant to the IPO registration statement or the shares of Ouster PubCo common stock issued as a matter of law upon the conversion thereof at the time of the Domestication, as context requires;

 

   

“public warrants” are to the redeemable warrants (including those that underlie the units) that were offered and sold by CLA in its initial public offering and registered pursuant to the IPO registration statement or the redeemable warrants of Ouster PubCo issued as a matter of law upon the conversion thereof at the time of the Domestication, as context requires;

 

   

“redemption” are to each redemption of public shares for cash pursuant to the Cayman Constitutional Documents and the Proposed Organizational Documents;

 

   

“Registration Rights Agreement” are to the Amended and Restated Registration Rights Agreement to be entered into at Closing, by and among Ouster PubCo, the Sponsor, certain members of the Sponsor, the Sponsor Related PIPE Investor and certain former stockholders of Ouster attached to this proxy statement/prospectus as Annex E, as amended and modified from time to time;

 

   

“Sarbanes Oxley Act” are to the Sarbanes-Oxley Act of 2002;

 

   

“SEC” are to the United States Securities and Exchange Commission;

 

   

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

 

   

“Sponsor” are to Colonnade Sponsor LLC, a Delaware limited liability company;

 

   

“Sponsor Related PIPE Investor” are to Colonnade WPB LLC, an affiliate of the Sponsor (together with its permitted transferees);

 

   

“Sponsor Support Agreement” are to that certain Support Agreement, dated December 21, 2020, by and among the Sponsor, CLA and Ouster attached to this proxy statement/prospectus as Annex B, as amended and modified from time to time;

 

   

“Subscription Agreements” are to the subscription agreements pursuant to which the PIPE Investment will be consummated each in the form attached to this proxy statement/prospectus as Annex D, as amended and modified from time to time;

 

   

“Third Party PIPE Investor” are to any PIPE Investor who is not the Sponsor Related PIPE Investor;

 

   

“trust account” are to the trust account established at the consummation of CLA’s initial public offering at JP Morgan Chase Bank, N.A. and maintained by Continental, acting as trustee;

 

   

“Trust Agreement” are to the Investment Management Trust Agreement, dated August 20, 2020, by and between CLA and Continental Stock Transfer & Trust Company, as trustee; and

 

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“warrants” are to the public warrants and the private placement warrants.

Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, all references in this proxy statement/prospectus to CLA Class A ordinary shares, shares of Ouster PubCo common stock or warrants include such securities underlying the units.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for future operations, including as they relate to the potential Business Combination, of CLA. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this proxy statement/prospectus, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. When CLA discusses its strategies or plans, including as they relate to the potential Business Combination, it is making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, CLA’s management.

Forward-looking statements in this proxy statement/prospectus may include, for example, statements about:

 

   

CLA’s ability to complete the Business Combination or, if CLA does not consummate the Business Combination, any other initial business combination;

 

   

satisfaction or waiver (if applicable) of the conditions to the Merger, including, among other things:

 

   

the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval of the Business Combination and related agreements and transactions by the respective shareholders of CLA and Ouster, (ii) effectiveness of the registration statement of which this proxy statement/prospectus forms a part of, (iii) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, (iv) receipt of approval for listing on the NYSE of the Ouster PubCo common stock to be issued in connection with the Merger, (v) that CLA have at least $5,000,001 of net tangible assets upon Closing and (vi) the absence of any injunctions; and

 

   

the amount of cash available in the trust account following the extraordinary general meeting, plus the PIPE Investment Amount actually received by CLA substantially concurrently with the Closing will be at least equal to $100 million, after deducting the amount required to satisfy CLA’s obligation to its shareholders (if any) that exercise their rights to redeem their public shares pursuant to the Cayman Constitutional Documents (the “Minimum Cash Amount”);

 

   

the occurrence of any other event, change or other circumstances that could give rise to the termination of the Merger Agreement;

 

   

the projected financial information, anticipated growth rate, and market opportunity of Ouster PubCo;

 

   

the ability to obtain or maintain the listing of Ouster PubCo common stock and Ouster PubCo warrants on the NYSE following the Business Combination;

 

   

our public securities’ potential liquidity and trading;

 

   

CLA officers and directors allocating their time to other businesses and potentially having conflicts of interest with CLA’s business or in approving the Business Combination;

 

   

the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;

 

   

the impact of the regulatory environment and complexities with compliance related to such environment;

 

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factors relating to the business, operations and financial performance of Ouster and its subsidiaries, including:

 

   

the impact of the COVID-19 pandemic;

 

   

adoption of lidar technology generally and of Ouster’s digital lidar technology, in particular;

 

   

Ouster’s future capital needs following the Business Combination;

 

   

Ouster’s ability to develop additional products and product offerings;

 

   

the ability of Ouster to maintain an effective system of internal control over financial reporting;

 

   

the ability of Ouster to maintain and protect its intellectual property;

 

   

the ability of Ouster to grow market share in its existing markets or any new markets it may enter;

 

   

Ouster’s reliance on single-source suppliers and a third-party manufacturer;

 

   

Ouster’s ability to recruit and retain qualified personnel;

 

   

the ability of Ouster to respond to general economic conditions;

 

   

the ability of Ouster to manage its growth effectively;

 

   

the ability of Ouster to achieve and maintain profitability in the future;

 

   

the success of strategic relationships with third parties; and

 

   

other factors detailed under the section entitled “Risk Factors.”

The forward-looking statements contained in this proxy statement/prospectus are based on current expectations and beliefs concerning future developments and their potential effects on us or Ouster. There can be no assurance that future developments affecting us or Ouster will be those that CLA or Ouster have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond CLA’s control or the control of Ouster) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” beginning on page 55 of this proxy statement/prospectus. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. CLA and Ouster undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Before any CLA shareholder grants its proxy or instructs how its vote should be cast or votes on the proposals to be put to the extraordinary general meeting, such stockholder should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect us.

 

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QUESTIONS AND ANSWERS FOR SHAREHOLDERS OF CLA

The questions and answers below highlight only selected information from this document and only briefly address some commonly asked questions about the proposals to be presented at the extraordinary general meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to CLA’s shareholders. CLA urges shareholders to read this proxy statement/prospectus, including the Annexes and the other documents referred to herein, carefully and in their entirety to fully understand the proposed Business Combination and the voting procedures for the extraordinary general meeting, which will be held at 10:00 am, Eastern Time, on March 9, 2021, at the offices of White & Case LLP located at 1221 Avenue of the Americas, New York, NY 10020, or virtually via live webcast. To participate in the special meeting, visit https://www.cstproxy.com/colonnadeacquisition/sm2021 and enter the 12 digit control number included on your proxy card. If you hold your shares through a bank, broker or other nominee, you will need to take additional steps to participate in the extraordinary general meeting, as described in this proxy statement.

 

Q:

Why am I receiving this proxy statement/prospectus?

 

A:

CLA shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Merger Agreement and approve the Business Combination. The Merger Agreement provides for, among other things, the merger of Merger Sub with and into Ouster, with Ouster surviving the merger as a wholly owned subsidiary of Ouster PubCo, in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in this proxy statement/prospectus. See the section entitled “BCA Proposal” for more detail.

A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A and you are encouraged to read it in its entirety.

As a condition to the Merger, CLA will change its jurisdiction of incorporation by effecting a deregistration under the Cayman Islands Companies Law and a domestication under Section 388 of the DGCL, pursuant to which CLA’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. As a result of and upon the effective time of the Domestication, (1) each of the then issued and outstanding 5,000,000 CLA Class B ordinary shares will convert automatically, on a one-for-one basis, into a CLA Class A ordinary share, (2) immediately following the conversion described in clause (1), each of the then issued and outstanding 25,000,000 CLA Class A ordinary shares will convert automatically, on a one-for-one basis, into a share of Ouster PubCo common stock; (3) each of the then issued and outstanding 10,000,000 CLA warrants will convert automatically into a Ouster PubCo warrant, pursuant to the Warrant Agreement, dated as of August 20, 2020, between CLA and Continental Stock Transfer & Trust Company (4) each of the then issued and outstanding units of CLA that have not been previously separated into the underlying CLA Class A ordinary shares and underlying CLA warrants upon the request of the holder thereof, will be cancelled and will entitle the holder thereof to one share of Ouster PubCo common stock and one-half of one Ouster PubCo warrant, and (5) each of the then issued and outstanding 6,000,000 private placement warrants of CLA will convert automatically into an Ouster PubCo warrant pursuant to the Warrant Agreement. No fractional Ouster PubCo warrants will be issued upon separation of the CLA units. See “Domestication Proposal” for additional information.

The provisions of the Proposed Organizational Documents will differ materially from the Cayman Constitutional Documents. Please see “What amendments will be made to the current constitutional documents of CLA?” below.

THE VOTE OF SHAREHOLDERS IS IMPORTANT. SHAREHOLDERS ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS, INCLUDING THE ANNEXES AND THE ACCOMPANYING FINANCIAL STATEMENTS OF CLA AND OUSTER, CAREFULLY AND IN ITS ENTIRETY.

 

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Q:

What proposals are shareholders of CLA being asked to vote upon?

 

A:

At the extraordinary general meeting, CLA is asking holders of ordinary shares to consider and vote upon:

 

   

a proposal to approve and adopt by ordinary resolution the Merger Agreement;

 

   

a proposal to approve by special resolution the Domestication;

 

   

a proposal to approve by special resolution the Proposed Certificate of Incorporation;

 

   

the following seven separate proposals to approve by special resolution on an advisory basis and as required by applicable SEC guidance, the following material differences between the Cayman Constitutional Documents and the Proposed Organizational Documents:

 

   

to authorize the change in the authorized capital stock of CLA from (i) 200,000,000 CLA Class A ordinary shares, 20,000,000 CLA Class B ordinary shares and 1,000,000 preference shares, par value $0.0001 per share, to (ii) 1,000,000,000 shares of Ouster PubCo common stock and 100,000,000 shares of Ouster PubCo preferred stock;

 

   

to authorize adopting Delaware as the exclusive forum for certain stockholder litigation;

 

   

to authorize electing not to be governed by Section 203 of the DGCL relating to takeovers by interested stockholders and, instead, be governed by a provision substantially similar to Section 203 of the DGCL;

 

   

to approve provisions providing that the affirmative vote of at least two-thirds of the voting power of all the then outstanding shares of capital stock entitled to vote generally in the election of directors will be required for stockholders to (i) adopt, amend or repeal the Proposed Bylaws and (ii) amend, alter, repeal or rescind Articles V(B), VII, VIII, IX, X, XI, XII and XIII of the Proposed Certificate of Incorporation;

 

   

to approve provisions permitting the removal of a director only for cause and only by the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote at an election of directors;

 

   

to approve provisions requiring stockholders to take action at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting;

 

   

to provide for certain additional changes, including, among other things, (i) changing the corporate name from “Colonnade Acquisition Corp.” to “Ouster, Inc.”, (ii) making Ouster PubCo’s corporate existence perpetual and (iii) removing certain provisions related to CLA’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which CLA’s board of directors believes is necessary to adequately address the needs of Ouster PubCo after the Business Combination;

 

   

a proposal to approve by ordinary resolution, for purposes of complying with applicable listing rules of the NYSE, the issuance of (a) shares of Ouster PubCo common stock to the PIPE Investors, including the Sponsor Related PIPE Investor, pursuant to the PIPE Investment and (b) shares of Ouster PubCo common stock to the Ouster Stockholders pursuant to the Merger Agreement;

 

   

a proposal to approve by ordinary resolution the 2021 Plan; and

 

   

a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting.

If CLA’s shareholders do not approve each of the Condition Precedent Proposals, then unless certain conditions in the Merger Agreement are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Business Combination may not be consummated. See “BCA Proposal,” “Domestication Proposal,” “Organizational Documents Proposal,” Stock Issuance Proposal” and “Incentive Award Plan Proposal”.

 

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CLA will hold the extraordinary general meeting to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the Business Combination and the other matters to be acted upon at the extraordinary general meeting. Shareholders of CLA should read it carefully.

After careful consideration, CLA’s board of directors has determined that the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposal, each of the Advisory Organizational Documents Proposals, the Stock Issuance Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal are in the best interests of CLA and its shareholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.

The existence of financial and personal interests of one or more of CLA’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of CLA and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, CLA’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of CLA’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

Are the proposals conditioned on one another?

 

A:

Yes. The Business Combination is conditioned on the approval of each of the Condition Precedent Proposals at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Advisory Organizational Documents Proposals and the Adjournment Proposal are not conditioned upon the approval of any other proposal.

 

Q:

Why is CLA proposing the Business Combination?

 

A:

CLA was organized to effect a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination, with one or more businesses or entities.

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.

Based on its due diligence investigations of Ouster and the industry in which it operates, including the financial and other information provided by Ouster in the course of CLA’s due diligence investigations, the CLA board of directors believes that the Business Combination with Ouster is in the best interests of CLA and its shareholders and presents an opportunity to increase shareholder value. However, there is no assurance of this. See “BCA Proposal—CLA’s Board of Directors’ Reasons for the Approval of the Business Combination” for additional information.

Although CLA’s board of directors believes that the Business Combination with Ouster presents a unique business combination opportunity and is in the best interests of CLA and its shareholders, the board of directors did consider certain potentially material negative factors in arriving at that conclusion. These factors are discussed in greater detail in the section entitled “BCA Proposal—CLA’s Board of Director’s Reasons for the Approval of the Business Combination,” as well as in the sections entitled “Risk Factors—Risks Related to Ouster’s Business and Industry.”

 

Q:

What will Ouster Stockholders receive in return for CLA’s acquisition of all of the issued and outstanding equity interests of Ouster?

 

A:

As a result of and upon the Closing, among other things, all outstanding shares of Ouster Capital Stock as of immediately prior to the effective time of the Merger, together with shares of Ouster common stock reserved in respect of Ouster Awards outstanding as of immediately prior to the Closing that will be converted into awards based on Ouster PubCo common stock, will be cancelled in exchange for the right to receive, or the reservation of, an aggregate of 150,000,000 shares of Ouster PubCo common stock (at a

 

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  deemed value of $10.00 per share) or, as applicable, shares underlying awards based on Ouster PubCo common stock, representing a pre-transaction fully-diluted equity value of Ouster of $1.5 billion. The portion of the Aggregate Merger Consideration reflecting the conversion of the Ouster Awards is calculated assuming that all Ouster PubCo Options are net-settled (although Ouster PubCo Options may by their terms be cash-settled, resulting in additional dilution). For further details, see “BCA Proposal—The Merger Agreement—Consideration—Aggregate Merger Consideration.”

 

Q:

What equity stake will current CLA shareholders and Ouster Stockholders hold in Ouster PubCo immediately after the consummation of the Business Combination?

 

A:

It is anticipated that, following the Business Combination, (1) CLA’s public shareholders are expected to own approximately 12.5% of the outstanding Ouster PubCo common stock, (2) Ouster Stockholders (without taking into account any public shares held by Ouster Stockholders prior to the consummation of the Business Combination or purchased in the PIPE Investment) are expected to own approximately 78.2% of the outstanding Ouster PubCo common stock, (3) the Sponsor and related parties (including the Sponsor Related PIPE Investor) are expected to collectively own approximately 3.8% of the outstanding Ouster PubCo common stock and (4) the Third Party PIPE Investors are expected to own approximately 5.5% of the outstanding Ouster PubCo common stock. These percentages assume (i) that no public shareholders exercise their redemption rights in connection with the Business Combination, (ii) (a) the vesting of all shares of Ouster PubCo common stock received in respect of the Ouster PubCo Restricted Shares, (b) the vesting and exercise of all Ouster PubCo Options for shares of Ouster PubCo common stock and (c) that Ouster PubCo issues shares of Ouster PubCo common stock as the Aggregate Merger Consideration pursuant to the Merger Agreement, which in the aggregate equals 150,000,000 shares of Ouster PubCo common stock (assuming that all Ouster PubCo Options are net-settled), and (iii) that Ouster PubCo issues 10,000,000 shares of Ouster PubCo common stock to the PIPE Investors pursuant to the PIPE Investment. If the actual facts are different from these assumptions, the percentage ownership retained by the Company’s existing shareholders in the combined company will be different.

The following table illustrates varying ownership levels in Ouster PubCo immediately following the consummation of the Business Combination based on the assumptions above.

 

     No Redemption      Maximum Redemption  

Stockholder

   Shares      %      Shares      %  

Former CLA Class A shareholders

     20,000,000        12.5        —          —    

Sponsor and related parties(1)

     6,175,000        3.8        6,175,000        4.4  

Former Ouster stockholders and warrant holders(2)

     125,196,001        78.2        125,196,001        89.3  

Third party investors in PIPE Investment(3)

     8,825,000        5.5        8,825,000        6.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total shares of Ouster PubCo common stock outstanding at closing of the Business Combination(4)

     160,196,001        100.0        140,196,001        100.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Amount includes 5,000,000 shares of Ouster PubCo common stock the Sponsor will receive upon conversion of its Class B ordinary shares and 1,175,000 shares subscribed for by the Sponsor Related PIPE Investors.

(2)

Amount includes 4,608,216 shares of Ouster PubCo common stock subject to repurchase related to the conversion of all outstanding shares of Ouster unvested restricted shares and early exercised stock options subject to repurchase and 5,233,766 shares of Ouster PubCo common stock related to shares of Ouster common stock issued upon early exercise of Ouster stock options in exchange for non-recourse notes, which will be repaid or forgiven at the time of closing of the Business Combination.

(3)

Amount includes 1,250,000 shares of Ouster PubCo common stock subscribed for by current stockholders of Ouster.

(4)

The figures in this table are presented only as illustrative examples and are based on the assumptions described above, which may be different from the actual amount of redemptions in connection with the Business Combination. In the event that CLA Class A ordinary shares are redeemed in connection with the Business Combination but the number of shares redeemed is less than 20,000,000, the ownership percentages set forth above will vary on a linear basis between the two scenarios.

For further details, see “BCA Proposal—The Merger Agreement—Consideration—Aggregate Merger Consideration.”

 

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Q:

How has the announcement of the Business Combination affected the trading price of the CLA Class A ordinary shares?

 

A:

On December 21, 2020, the trading date before the public announcement of the Business Combination, CLA’s public units, Class A ordinary shares and warrants closed at $10.58, $10.08 and $1.12, respectively.

 

Q:

Will the Company obtain new financing in connection with the Business Combination?

 

A:

Yes. The PIPE Investors have agreed to purchase in the aggregate approximately 10,000,000 shares of Ouster PubCo common stock, for approximately $100,000,000 of gross proceeds, in the PIPE Investment, a portion of which is expected to be funded by the Sponsor Related PIPE Investor. The PIPE Investment is contingent upon, among other things, the closing of the Business Combination. See “BCA Proposal—Related Agreements—Subscription Agreements.”

 

Q:

Why is CLA proposing the Domestication?

 

A:

Our board of directors believes that there are significant advantages to us that will arise as a result of a change of CLA’s domicile to Delaware. Further, CLA’s board of directors believes that any direct benefit that the DGCL provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. CLA’s board of directors believes that there are several reasons why a reincorporation in Delaware is in the best interests of the Company and its shareholders, including (i) the prominence, predictability and flexibility of the DGCL, (ii) Delaware’s well-established principles of corporate governance and (iii) the increased ability for Delaware corporations to attract and retain qualified directors. Each of the foregoing are discussed in greater detail in the section entitled “Domestication Proposal—Reasons for the Domestication.”

To effect the Domestication, CLA will file a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and file a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which CLA will be domesticated and continue as a Delaware corporation.

The approval of the Domestication Proposal is a condition to the closing of the Merger under the Merger Agreement. The approval of the Domestication Proposal requires a special resolution under the Cayman Islands Companies Law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting.

 

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Q:

What amendments will be made to the current constitutional documents of CLA?

 

A:

The consummation of the Business Combination is conditioned, among other things, on the Domestication. Accordingly, in addition to voting on the Business Combination, CLA’s shareholders are also being asked to consider and vote upon a proposal to approve the Domestication and replace the Cayman Constitutional Documents, in each case, under the Cayman Islands Companies Law, with the Proposed Organizational Documents, in each case, under the DGCL, which differ materially from the Cayman Constitutional Documents in the following respects:

 

    

Cayman Constitutional Documents

  

Proposed Organizational Documents

Authorized Shares

(Advisory Organizational Documents Proposal 4A)

  

The Cayman Constitutional Documents authorize 221,000,000 CLA shares, consisting of 200,000,000 CLA Class A ordinary shares, 20,000,000 CLA Class B ordinary shares and 1,000,000 CLA preference shares.

 

See paragraph 4 of the Existing Memorandum.

 

See Article 51 of the Cayman Constitutional Documents.

  

The Proposed Organizational Documents authorize 1,100,000,000 shares, consisting of 1,000,000,000 shares of Ouster PubCo common stock and 100,000,000 shares of Ouster PubCo preferred stock.

 

See Article IV of the Proposed Certificate of Incorporation.

 

Default rule under the DGCL.

Exclusive Forum Provision (Advisory Organizational Documents Proposal 4B)    The Cayman Constitutional Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation.   

The Proposed Organizational Documents adopt (i) Delaware as the exclusive forum for certain stockholder litigation and (ii) the federal district courts of the United States of America as the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

 

These provisions are inapplicable to suits brought to enforce any liability or duty created by the Exchange Act and any stockholder litigation for which the federal courts of the United States of America have exclusive jurisdiction.

 

See Article XII of the Proposed Certificate of Incorporation.

Takeovers by Interested Stockholders

(Advisory Organizational Documents Proposal 4C)

   The Cayman Constitutional Documents do not provide restrictions on takeovers of CLA by a related shareholder following a business combination.   

The Proposed Organizational Documents will have Ouster PubCo elect not to be governed by Section 203 of the DGCL relating to takeovers by interested stockholders but will provide other similar restrictions regarding takeovers by interested stockholders.

 

See Article X of the Proposed Certificate of Incorporation.

 

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Cayman Constitutional Documents

  

Proposed Organizational Documents

Adoption of Supermajority Vote Requirement to Amend the Proposed Organizational Documents

(Advisory Organizational Documents Proposal 4D)

  

The Cayman Constitutional Documents provide that amendments to change CLA’s name, alter or add to the Articles or certain sections of the Memorandum or to reduce its share capital or any capital redemption reserve fund may be made by a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at a general meeting.

 

See Article 18.3 of the Cayman Constitutional Documents.

  

The Proposed Organizational Documents require the affirmative vote of at least two-thirds of the voting power of the outstanding shares to (i) adopt, amend or repeal the Proposed Bylaws, and to (ii) amend, alter, repeal or rescind Articles V(B), VII, VIII, IX, X, XI, XII and XIII of the Certificate of Incorporation.

 

See Article XIII of the Proposed Certificate of Incorporation.

Removal of Directors

(Advisory Organizational Documents Proposal 4E)

  

The Cayman Constitutional Documents provide that before a Business Combination, holders of Class B Shares may remove any director, and that after a Business Combination, shareholders may by an Ordinary Resolution remove any director.

 

See Article 31 of the Cayman Constitutional Documents.

  

The Proposed Organizational Documents permit the removal of a director only for cause and only by the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote at an election of directors.

 

Article VII, subsection (C) of the Proposed Certificate of Incorporation.

Action by Written Consent of Stockholders

(Advisory Organizational Documents Proposal 4F)

  

The Cayman Constitutional Documents permit shareholders to approve matters by unanimous written resolution.

 

See Article 31.4 of the Cayman Constitutional Documents.

  

The Proposed Organizational Documents require stockholders to take action at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting.

 

Article VIII, subsection (A) of the Proposed Certificate of Incorporation.

Other Changes In Connection With Adoption of the Proposed Organizational Documents

(Advisory Organizational Documents Proposal 4G)

  

The Cayman Constitutional Documents include provisions related to CLA’s status as a blank check company prior to the consummation of a business combination.

 

See Article 51 of the Cayman Constitutional Documents.

   The Proposed Organizational Documents do not include such provisions related to CLA’s status as a blank check company, which no longer will apply upon consummation of the Merger, as CLA will cease to be a blank check company at such time.

 

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Q:

How will the Domestication affect my ordinary shares, warrants and units?

 

A:

As a result of and upon the effective time of the Domestication, (1) each of the then issued and outstanding 5,000,000 CLA Class B ordinary shares will convert automatically, on a one-for-one basis, into a CLA Class A ordinary share, (2) immediately following the conversion described in clause (1), each of the then issued and outstanding 25,000,000 CLA Class A ordinary shares will convert automatically, on a one-for-one basis, into a share of Ouster PubCo common stock, (3) each of the then issued and outstanding 10,000,000 CLA warrants will convert automatically into a Ouster PubCo warrant, pursuant to the Warrant Agreement (4) each of the then issued and outstanding units of CLA that have not been previously separated into the underlying CLA Class A ordinary shares and underlying CLA warrants upon the request of the holder thereof, will be cancelled and will entitle the holder thereof to one share of Ouster PubCo common stock and one-half of one Ouster PubCo warrant, and (5) each of the then issued and outstanding 6,000,000 private placement warrants of CLA will convert automatically into an Ouster PubCo warrant pursuant to the Warrant Agreement. No fractional Ouster PubCo warrants will be issued upon separation of the CLA units. See “Domestication Proposal” for additional information.

 

Q:

What are the U.S. federal income tax consequences of the Domestication?

 

A:

As discussed more fully under “U.S. Federal Income Tax Considerations,” CLA intends for the Domestication to qualify as a reorganization within the meaning of Section 368(a)(l)(F) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). Assuming that the Domestication so qualifies, and subject to the “passive foreign investment company” (“PFIC”) rules discussed below and under “U.S. Federal Income Tax Considerations—I. U.S. Holders—A. Tax Effects of the Domestication to U.S. Holders—5. PFIC Considerations,” U.S. Holders (as defined in “U.S. Federal Income Tax Considerations—I. U.S. Holders”) will be subject to Section 367(b) of the Code and, as a result:

 

   

A U.S. Holder whose CLA Class A ordinary shares have a fair market value of less than $50,000 and who, on the date of the Domestication, owns (actually or constructively) less than 10% of the total combined voting power of all classes of CLA stock entitled to vote and less than 10% of the total value of all classes of CLA stock generally will not recognize any gain or loss and will not be required to include any part of CLA’s earnings in income in connection with the Domestication;

 

   

A U.S. Holder whose CLA Class A ordinary shares have a fair market value of $50,000 or more and who, on the date of the Domestication, owns (actually or constructively) less than 10% of the total combined voting power of all classes of CLA stock entitled to vote and less than 10% of the total value of all classes of CLA stock generally will recognize gain (but not loss) on the exchange of CLA Class A ordinary shares for Ouster PubCo common stock pursuant to the Domestication. As an alternative to recognizing gain, such U.S. Holder may file an election to include in income as a deemed dividend deemed paid by CLA the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to its CLA Class A ordinary shares provided certain other requirements are satisfied; and

 

   

A U.S. Holder who, on the date of the Domestication, owns (actually or constructively) 10% or more of the total combined voting power of all classes of CLA stock entitled to vote or 10% or more of the total value of all classes of CLA stock generally will be required to include in income as a deemed dividend deemed paid by CLA the “all earnings and profits amount” attributable to its CLA Class A ordinary shares as a result of the Domestication.

CLA does not expect to have significant cumulative earnings and profits, if any, on the date of the Domestication.

As discussed more fully under “U.S. Federal Income Tax Considerations—I. U.S. Holders—A. Tax Effects of the Domestication to U.S. Holders—5. PFIC Considerations,” CLA believes that it is likely classified as a PFIC for U.S. federal income tax purposes. In such case, notwithstanding the U.S. federal income tax consequences of the Domestication discussed in the foregoing, proposed Treasury Regulations under Section 1291(f) of the Code (which have a retroactive effective date), if finalized in their current form, generally would require a U.S. Holder to recognize gain on the exchange of CLA Class A ordinary shares or

 

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warrants for Ouster PubCo common stock or warrants pursuant to the Domestication. Any such gain would be taxable income with no corresponding receipt of cash in the Domestication. The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on a complex set of rules. In addition, the proposed Treasury Regulations provide coordinating rules with other sections of the Code, including Section 367(b), which affect the manner in which the rules under such other sections apply to transfers of PFIC stock. However, it is difficult to predict whether, in what form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code may be adopted and how any such Treasury Regulations would apply. Importantly, however, U.S. Holders that make or have made certain elections discussed further under “U.S. Federal Income Tax Considerations—I. U.S. Holders—A. Tax Effects of the Domestication to U.S. Holders—5. PFIC Considerations—d. QEF Election and Mark-to-Market Election” with respect to their CLA Class A ordinary shares are generally not subject to the same gain recognition rules under the currently proposed Treasury Regulations under Section 1291(f) of the Code. Currently, there are no elections available that apply to CLA warrants, and the application of the PFIC rules to CLA warrants is unclear. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see “U.S. Federal Income Tax Considerations—I. U.S. Holders.”

Each U.S. Holder of CLA Class A ordinary shares or warrants is urged to consult its own tax advisor concerning the application of the PFIC rules, including the proposed Treasury Regulations, to the exchange

of CLA Class A ordinary shares and warrants for Ouster PubCo common stock and warrants pursuant to the Domestication.

Additionally, the Domestication may cause Non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations—II. Non-U.S. Holders”) to become subject to U.S. federal income withholding taxes on any amounts treated as dividends paid in respect of such Non-U.S. Holder’s Ouster PubCo common stock after the Domestication.

The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are urged to consult their tax advisor regarding the tax consequences to them of the Domestication, including the applicability and effect of U.S. federal, state, local and non-U.S. tax laws. For a more complete discussion of the U.S. federal income tax considerations of the Domestication, see “U.S. Federal Income Tax Considerations.”

 

Q.

Do I have redemption rights?

 

A:

If you are a holder of public shares, you have the right to request that we redeem all or a portion of your public shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the BCA Proposal. If you wish to exercise your redemption rights, please see the answer to the next question: “How do I exercise my redemption rights?”

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

The Sponsor (whose members include CLA’s directors and officers) has agreed to waive its redemption rights with respect to all of the founder shares in connection with the consummation of the Business Combination. The founder shares will be excluded from the pro rata calculation used to determine the per-share redemption price.

 

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Q:

How do I exercise my redemption rights?

 

A:

If you are a public shareholder and wish to exercise your right to redeem the public shares, you must:

(i) (a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares;

(ii) submit a written request to Continental, CLA’s transfer agent, that Ouster PubCo redeem all or a portion of your public shares for cash; and

(iii) deliver your certificates for public shares (if any) along with the redemption forms to Continental, CLA’s transfer agent, physically or electronically through The Depository Trust Company (“DTC”).

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 pm, Eastern Time, on March 5, 2021 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

The address of Continental, CLA’s transfer agent, is listed under the question “Who can help answer my questions?” below.

Holders of units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact Continental, CLA’s transfer agent, directly and instruct them to do so.

Public shareholders will be entitled to request that their public shares be redeemed for a pro rata portion of the amount then on deposit in the trust account calculated as of two business days prior to the consummation of the Business Combination including interest earned on the funds held in the trust account and not previously released to us (net of taxes payable). For illustrative purposes, as of September 30, 2020, this would have amounted to approximately $10.00 per issued and outstanding public share. However, the proceeds deposited in the trust account could become subject to the claims of CLA’s creditors, if any, which could have priority over the claims of the public shareholders, regardless of whether such public shareholders vote or, if they do vote, irrespective of if they vote for or against the BCA Proposal. Therefore, the per share distribution from the trust account in such a situation may be less than originally expected due to such claims. Whether you vote, and if you do vote irrespective of how you vote, on any proposal, including the BCA Proposal, will have no impact on the amount you will receive upon exercise of your redemption rights. It is expected that the funds to be distributed to public shareholders electing to redeem their public shares will be distributed promptly after the consummation of the Business Combination.

A CLA shareholder may not withdraw a redemption request once submitted to CLA unless CLA’s board of directors determines (in their sole discretion) to permit the withdrawal of such redemption request (which they may do in whole or in part). Furthermore, if a holder of a public share delivers its certificate (if any) along with the redemption forms in connection with an election of its redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that CLA permit the withdrawal of the redemption request and instruct Continental, CLA’s transfer agent, to return the certificate (physically or electronically). The holder can make such request by contacting Continental, CLA’s transfer agent, at the address or email address listed in this proxy statement/prospectus.

Any corrected or changed written exercise of redemption rights must be received by Continental, CLA’s transfer agent, prior to the vote taken on the BCA Proposal at the extraordinary general meeting. No request for redemption will be honored unless the holder’s certificates for public shares (if any) along with the redemption forms have been delivered (either physically or electronically) to Continental, CLA’s agent, at least two business days prior to the vote at the extraordinary general meeting.

If a holder of public shares properly makes a request for redemption and the certificates for public shares (if any) along with the redemption forms are delivered as described above, then, if the Business Combination is

 

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consummated, Ouster PubCo will redeem the public shares for a pro rata portion of funds deposited in the trust account, calculated as of two business days prior to the consummation of the Business Combination. The redemption will take place following the Domestication and, accordingly, it is shares of Ouster PubCo common stock that will be redeemed immediately after consummation of the Business Combination.

If you are a holder of public shares and you exercise your redemption rights, such exercise will not result in the loss of any warrants that you may hold.

 

Q:

If I am a holder of units, can I exercise redemption rights with respect to my units?

 

A:

No. Holders of issued and outstanding units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If you hold your units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact Continental, CLA’s transfer agent, directly and instruct them to do so. You are requested to cause your public shares to be separated and delivered to Continental, CLA’s transfer agent, along with the redemption forms by 5:00 pm, Eastern Time, on March 5, 2021 (two business days before the extraordinary general meeting) in order to exercise your redemption rights with respect to your public shares.

 

Q:

What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A:

The U.S. federal income tax consequences of exercising your redemption rights with respect to your CLA Class A ordinary shares to receive cash from the trust account in exchange for Ouster PubCo common stock depend on your particular facts and circumstances. It is possible that you may be treated as selling such Ouster PubCo common stock and, as a result, recognize capital gain or capital loss. It is also possible that the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of Ouster PubCo common stock that you own or are deemed to own (including through the ownership of Ouster PubCo warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, see “U.S. Federal Income Tax Considerations.”

Additionally, because the Domestication will occur prior to the redemption of any shareholder, U.S. Holders (as defined in “U.S. Federal Income Tax Considerations—I. U.S. Holders”) exercising redemption rights will be subject to the potential tax consequences of Section 367 of the Code as well as potential tax consequences of the U.S. federal income tax rules relating to PFICs. The tax consequences of Section 367 of the Code and the PFIC rules are discussed more fully below under “U.S. Federal Income Tax Considerations—I. U.S. Holders.”

All holders considering exercising redemption rights are urged to consult their tax advisor on the tax consequences to them of an exercise of redemption rights, including the applicability and effect of U.S. federal, state, local and non-U.S. tax laws.

 

Q:

What happens to the funds deposited in the trust account after consummation of the Business Combination?

 

A:

Following the closing of CLA’s initial public offering, an amount equal to $200 million ($10.00 per unit) of the net proceeds from CLA’s initial public offering and the sale of the private placement warrants was placed in the trust account. As of September 30, 2020, funds in the trust account totaled $200,001,752 and were comprised entirely of U.S. government treasury obligations with a maturity of 185 days or less or of money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), which invest only in direct U.S. government treasury obligations. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (1) the completion of a business combination (including the Closing), (2) the

 

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  redemption of any public shares properly tendered in connection with a shareholder vote to amend the Cayman Constitutional Documents to modify the substance or timing of CLA’s obligation to redeem 100% of the public shares if it does not complete a business combination by August 25, 2022 and (3) the redemption of all of the public shares if CLA is unable to complete a business combination by August 25, 2022 (or if such date is further extended at a duly called extraordinary general meeting, such later date), subject to applicable law.

Upon consummation of the Business Combination, the funds deposited in the trust account will be released to pay holders of CLA public shares who properly exercise their redemption rights; to pay transaction fees and expenses associated with the Business Combination; and for working capital and general corporate purposes of Ouster PubCo following the Business Combination. See “Summary of the Proxy Statement/Prospectus—Sources and Uses of Funds for the Business Combination.”

 

Q:

What happens if a substantial number of the public shareholders vote in favor of the BCA Proposal and exercise their redemption rights?

 

A:

Our public shareholders are not required to vote in respect of the Business Combination in order to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders.

The Merger Agreement provides that the obligations of Ouster to consummate the Merger are conditioned on, among other things, that the amount of cash available in the trust account at Closing must be at least equal to the Minimum Cash Amount. If such conditions are not met, and such conditions are not or cannot be waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated. In addition, in no event will CLA redeem public shares in an amount that would cause its net tangible assets to be less than $5,000,001.

 

Q:

What conditions must be satisfied to complete the Business Combination?

 

A:

The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval of the Business Combination and related agreements and transactions by the respective shareholders of CLA and Ouster, (ii) effectiveness of the registration statement of which this proxy statement/prospectus forms a part, (iii) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, (iv) receipt of approval for listing on the NYSE the shares of Ouster PubCo common stock to be issued in connection with the Merger, (v) that CLA have at least $5,000,001 of net tangible assets upon Closing and (vi) the absence of any injunctions. In addition, Ouster’s obligations to consummate the Merger are also conditioned on, among other things, the satisfaction or waiver of the Minimum Cash Condition.

For more information about conditions to the consummation of the Business Combination, see “BCA Proposal—The Merger Agreement.”

 

Q:

When do you expect the Business Combination to be completed?

 

A:

It is currently expected that the Business Combination will be consummated in the first quarter of 2021. This date depends, among other things, on the approval of the proposals to be put to CLA shareholders at the extraordinary general meeting. However, such meeting could be adjourned if the Adjournment Proposal is adopted by CLA’s shareholders at the extraordinary general meeting and CLA elects to adjourn the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting. For a description of the conditions for the completion of the Business Combination, see “BCA Proposal—The Merger Agreement.”

 

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Q:

What happens if the Business Combination is not consummated?

 

A:

CLA will not complete the Domestication to Delaware unless all other conditions to the consummation of the Business Combination have been satisfied or waived by the parties in accordance with the terms of the Merger Agreement. If CLA is not able to complete the Business Combination with Ouster by August 25, 2022 and is not able to complete another business combination by such date, in each case, as such date may be extended pursuant to the Cayman Constitutional Documents, CLA will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible, but not more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board, dissolve and liquidate, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

 

Q:

Do I have appraisal rights in connection with the proposed Business Combination and the proposed Domestication?

 

A:

Neither CLA’s shareholders nor CLA’s warrant holders have appraisal rights in connection with the Business Combination or the Domestication under Cayman Islands law or under the DGCL.

 

Q:

What do I need to do now?

 

A:

CLA urges you to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety and to consider how the Business Combination will affect you as a shareholder or warrant holder. CLA’s shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

 

Q:

How do I vote?

 

A:

If you are a holder of record of ordinary shares on the record date for the extraordinary general meeting, you may vote in person at the extraordinary general meeting or by submitting a proxy for the extraordinary general meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage-paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the extraordinary general meeting and vote in person, obtain a valid proxy from your broker, bank or nominee.

 

Q:

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A:

No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement/prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent, and you may need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker, bank or nominee as to how to vote your shares. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you

 

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  provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe all the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares and you should instruct your broker to vote your shares in accordance with directions you provide. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal.

 

Q:

When and where will the extraordinary general meeting be held?

 

A:

The extraordinary general meeting will be held at 10:00 am, Eastern Time, on March 9, 2021, at the offices of White & Case LLP located at 1221 Avenue of the Americas, New York, NY 10020, or virtually via live webcast at https://www.cstproxy.com/colonnadeacquisition/sm2021, or such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals.

 

Q:

Who is entitled to vote at the extraordinary general meeting?

 

A:

CLA has fixed February 8, 2021 as the record date for the extraordinary general meeting. If you were a shareholder of CLA at the close of business on the record date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the extraordinary general meeting.

 

Q:

How many votes do I have?

 

A:

CLA shareholders are entitled to one vote at the extraordinary general meeting for each ordinary share held of record as of the record date. As of the close of business on the record date for the extraordinary general meeting, there were 25,000,000 ordinary shares issued and outstanding, of which 20,000,000 were issued and outstanding public shares.

 

Q:

What constitutes a quorum?

 

A:

A quorum of CLA shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if the holders of a majority of the issued and outstanding ordinary shares entitled to vote at the extraordinary general meeting are represented in person or by proxy. As of the record date for the extraordinary general meeting, 12,500,001 ordinary shares would be required to achieve a quorum.

 

Q:

What vote is required to approve each proposal at the extraordinary general meeting?

 

   

BCA Proposal: The approval of the BCA Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under the Cayman Islands Companies law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

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Organizational Documents Proposal: The approval of the Organizational Documents Proposal requires a special resolution under the Cayman Islands Companies law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Advisory Organizational Documents Proposals: The separate approval of each of the Advisory Organizational Documents Proposals, each of which is a non-binding vote, requires a special resolution under the Cayman Islands Companies law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Stock Issuance Proposal: The approval of the Stock Issuance Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Incentive Award Plan Proposal: The approval of the Incentive Award Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

   

Adjournment Proposal: The approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

 

Q:

What are the recommendations of CLA’s board of directors?

 

A:

CLA’s board of directors believes that the BCA Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of CLA’s shareholders and unanimously recommends that its shareholders vote “FOR” the approval of the BCA Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Organizational Documents Proposal, “FOR” the approval, on an advisory basis, of each of the separate Advisory Organizational Documents Proposals, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Award Plan Proposal and “FOR” the approval of the Adjournment Proposal, in each case, if presented to the extraordinary general meeting.

The existence of financial and personal interests of one or more of CLA’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of CLA and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, CLA’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of CLA’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

How does the Sponsor intend to vote its shares?

 

A:

The Sponsor has agreed to vote all the founder shares and any other public shares it may hold in favor of all the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/prospectus, the Sponsor (whose members include CLA’s directors and officers) owns 20% of the issued and outstanding ordinary shares.

At any time at or prior to the Business Combination, subject to applicable securities laws (including with respect to material non-public information), the Sponsor, the existing stockholders of Ouster or our or their respective directors, officers, advisors or respective affiliates may (i) purchase public shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or elect to redeem, or indicate an intention to redeem, public shares, (ii) execute

 

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agreements to purchase such shares from such investors in the future, or (iii) enter into transactions with such investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of the Condition Precedent Proposals or not redeem their public shares. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of CLA’s shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, the existing stockholders of Ouster or our or their respective directors, officers, advisors, or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of (1) satisfaction of the requirement that holders of a majority of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the BCA Proposal, the Stock Issuance Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal, (2) satisfaction of the requirement that holders of a majority of at least two-thirds of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the Domestication Proposal, the Organizational Documents Proposal, and the Advisory Organizational Documents Proposal, (3) satisfaction of the Minimum Cash Condition, (4) otherwise limiting the number of public shares electing to redeem and (5) CLA’s net tangible assets being at least $5,000,001.

Entering into any such arrangements may have a depressive effect on our ordinary shares (e.g., by giving an investor or holder the ability to effectively purchase shares at a price lower than market, such investor or holder may therefore become more likely to sell the shares he or she owns, either at or prior to the Business Combination). If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved.

The existence of financial and personal interests of one or more of CLA’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of CLA and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, CLA’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of CLA’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

What happens if I sell my CLA ordinary shares before the extraordinary general meeting?

 

A:

The record date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your public shares after the applicable record date, but before the extraordinary general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at such general meeting but the transferee, and not you, will have the ability to redeem such shares (if time permits).

 

Q:

May I change my vote after I have mailed my signed proxy card?

 

A:

Yes. Shareholders may send a later-dated, signed proxy card to CLA’s Chairman at CLA’s address set forth below so that it is received by CLA’s Chairman prior to the vote at the extraordinary general meeting (which is scheduled to take place on March 9, 2021) or attend the extraordinary general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to CLA’s Chairman, which must be received by CLA’s Chairman prior to the vote at the extraordinary general meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.

 

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Q:

What happens if I fail to take any action with respect to the extraordinary general meeting?

 

A:

If you fail to take any action with respect to the extraordinary general meeting and the Business Combination is approved by shareholders and the Business Combination is consummated, you will become a stockholder or warrant holder of Ouster PubCo. If you fail to take any action with respect to the extraordinary general meeting and the Business Combination is not approved, you will remain a shareholder or warrant holder of CLA. However, if you fail to vote with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your public shares in connection with the Business Combination (if time permits).

 

Q:

What should I do with my share certificates, warrant certificates or unit certificates?

 

A:

Our shareholders who exercise their redemption rights must deliver (either physically or electronically) their share certificates (if any) along with the redemption forms to Continental, CLA’s transfer agent, prior to the extraordinary general meeting.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 pm, Eastern Time, on March 5, 2021 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

Our warrant holders should not submit the certificates relating to their warrants. Public shareholders who do not elect to have their public shares redeemed for the pro rata share of the trust account should not submit the certificates relating to their public shares.

Upon the Domestication, holders of CLA units, Class A ordinary shares, Class B ordinary shares and warrants will receive shares of Ouster PubCo common stock and warrants, as the case may be, without needing to take any action and, accordingly, such holders should not submit any certificates relating to their units, Class A ordinary shares (unless such holder elects to redeem the public shares in accordance with the procedures set forth above), Class B ordinary shares or warrants.

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your ordinary shares.

 

Q:

Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting?

 

A:

CLA will pay the cost of soliciting proxies for the extraordinary general meeting. CLA has engaged Morrow Sodali LLC (“Morrow”) to assist in the solicitation of proxies for the extraordinary general meeting. CLA has agreed to pay Morrow a fee of $25,000, plus disbursements. CLA will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of CLA Class A ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of CLA Class A ordinary shares and in obtaining voting instructions from those owners. CLA’s directors and officers may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

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Q:

Where can I find the voting results of the extraordinary general meeting?

 

A:

The preliminary voting results will be expected to be announced at the extraordinary general meeting. CLA will publish final voting results of the extraordinary general meeting in a Current Report on Form 8-K within four business days after the extraordinary general meeting.

 

Q:

Who can help answer my questions?

 

A:

If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card, you should contact:

Morrow Sodali LLC

470 West Avenue

Stamford, CT 06902

Telephone: (800) 662-5200

(Banks and brokers can call: (203) 658-9400)

Email: CLA.info@investor.morrowsodali.com

You also may obtain additional information about CLA from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your public shares, you will need to deliver the certificates for your public shares (if any) along with the redemption forms (either physically or electronically) to Continental, CLA’s transfer agent, at the address below prior to the extraordinary general meeting. Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 pm, Eastern Time, on March 5, 2021 (two business days before the extraordinary general meeting) in order for their shares to be redeemed. If you have questions regarding the certification of your position or delivery of your share certificates (if any) along with the redemption forms, please contact:

Continental Stock Transfer & Trust Company

1 State Street, 30th Floor

New York, New York 10004

Attention: Mark Zimkind

Email: mzimkind@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the extraordinary general meeting, including the Business Combination, you should read this entire document carefully, including the Merger Agreement, which is attached as Annex A to this proxy statement/prospectus. The Merger Agreement is the legal document that governs the Business Combination and the other transactions that will be undertaken in connection therewith. The Merger Agreement is also described in detail in this proxy statement/prospectus in the section entitled “BCA Proposal—The Merger Agreement.”

The Parties to the Business Combination

CLA

CLA is a blank check company incorporated on June 4, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.

On August 25, 2020, CLA consummated its initial public offering of 20,000,000 units, with each unit consisting of one CLA Class A ordinary share and one-half of one public warrant. The units were sold at a price of $10.00 per unit, generating gross proceeds to CLA of $200,000,000.

Following the closing of CLA’s initial public offering, a total of $200 million ($10.00 per unit) of the proceeds from its initial public offering was placed in the trust account. As of September 30, 2020, funds in the trust account totaled $200,001,752.

The CLA units, CLA Class A ordinary shares and CLA warrants are currently listed on the NYSE under the symbols “CLA,” “CLA.U” and “CLA.WS,” respectively.

CLA’s principal executive office is located at 1400 Centrepark Blvd, Suite 810, West Palm Beach, FL 33401. Its telephone number is (650) 521-9007. CLA’s corporate website address is https://www.claacq.com/. CLA’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.

Merger Sub

Beam Merger Sub, Inc. (“Merger Sub”) is a Delaware corporation and a wholly owned subsidiary of CLA. Merger Sub does not own any material assets or operate any business. Merger Sub’s principal executive office is located at 1400 Centrepark Blvd, Suite 810, West Palm Beach, FL 33401. Its telephone number is (650) 521-9007.

Ouster

Ouster is a Delaware corporation incorporated on June 30, 2015. 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.

Proposals to be Put to the Shareholders of CLA at the Extraordinary General Meeting

The following is a summary of the proposals to be put to the extraordinary general meeting of CLA and certain transactions contemplated by the Merger Agreement. Each of the proposals below, except the



 

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Adjournment Proposal and the Advisory Organizational Documents Proposals, is cross-conditioned on the approval of each other. The Adjournment Proposal and the Advisory Organizational Documents Proposals are not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus. The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting.

BCA Proposal

As discussed in this proxy statement/prospectus, CLA is asking its shareholders to approve by ordinary resolution and adopt the Agreement and Plan of Merger, dated as of December 21, 2020, by and among CLA, Merger Sub and Ouster, a copy of which is attached to this proxy statement/prospectus as Annex A. The Merger Agreement provides for, among other things, following the Domestication of CLA to Delaware as described below, the merger of Merger Sub with and into Ouster, with Ouster surviving the merger as a wholly owned subsidiary of Ouster PubCo, in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in this proxy statement/prospectus. After consideration of the factors identified and discussed in the section entitled “BCA Proposal—CLA’s Board of Directors’ Reasons for the Approval of the Business Combination,” CLA’s board of directors concluded that the Business Combination met the requirements disclosed in the prospectus for CLA’s initial public offering, including that the business of Ouster and its subsidiaries had a fair market value equal to at least 80% of the net assets held in the trust account (excluding the amount of any deferred underwriting discount held in trust) at the time of CLA’s signing the Merger Agreement. For more information about the transactions contemplated by the Merger Agreement, see “BCA Proposal.”

Aggregate Merger Consideration

As a result of and upon the Closing, among other things, all outstanding shares of Ouster Capital Stock (after giving effect to the Ouster Warrant Settlement, as more fully described elsewhere in this proxy statement/prospectus) as of immediately prior to the effective time of the Merger and, together with shares of Ouster common stock reserved in respect of Ouster Awards outstanding as of immediately prior to the Closing that will be converted into awards based on Ouster PubCo common stock, as more fully described elsewhere in this proxy statement/prospectus, will be cancelled in exchange for the right to receive, or the reservation of, an aggregate of 150,000,000 shares of Ouster PubCo common stock (at a deemed value of $10.00 per share), which, in the case of Ouster Awards, will be shares underlying awards based on Ouster PubCo common stock representing a fully-diluted pre-transaction equity value of Ouster of $1.5 billion. The portion of the Aggregate Merger Consideration reflecting the conversion of the Ouster Awards is calculated assuming that all Ouster PubCo Options are net-settled (although Ouster PubCo Options may by their terms be cash-settled, resulting in additional dilution). For further details, see “BCA Proposal—The Merger Agreement—Consideration—Aggregate Merger Consideration.”

Closing Conditions

The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval by CLA’s shareholders of the Business Combination and related agreements and transactions, (ii) the effectiveness of the registration statement of which this proxy statement/prospectus forms a part, (iii) the receipt of certain regulatory approvals (including, but not limited to, approval for listing on the NYSE of the shares of Ouster PubCo common stock to be issued in connection with the Merger), (iv) that CLA has at least $5,000,001 of net tangible assets upon Closing and (v) the absence of any injunctions.

Other conditions to Ouster’s obligations to consummate the Merger include, among others, that as of the Closing (i) the Domestication has been completed, and (ii) that the amount of cash available in the trust account



 

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following the extraordinary general meeting, plus the PIPE Investment amount actually received by CLA substantially concurrently with the Closing is equal to or greater than the $100.0 million. If such conditions are not met, and such conditions are not or cannot be waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated. In addition, pursuant to the Cayman Constitutional Documents, in no event will CLA redeem public shares in an amount that would cause its net tangible assets to be less than $5,000,001.

For further details, see “BCA Proposal—The Merger Agreement.

Domestication Proposal

If the BCA Proposal is approved, then CLA will ask its shareholders to approve by special resolution the Domestication Proposal. As a condition to closing the Business Combination pursuant to the terms of the Merger Agreement, the board of directors of CLA has unanimously approved the Domestication Proposal. The Domestication Proposal, if approved, will authorize a change of CLA’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware. Accordingly, while CLA is currently governed by the Cayman Islands Companies Law, upon the Domestication, Ouster PubCo will be governed by the DGCL. There are differences between Cayman Islands corporate law and Delaware corporate law as well as the Cayman Constitutional Documents and the Proposed Organizational Documents. Accordingly, CLA encourages shareholders to carefully review the information in “Comparison of Corporate Governance and Shareholder Rights.”

As a result of and upon the effective time of the Domestication, (1) each of the then issued and outstanding 5,000,000 CLA Class B ordinary shares will convert automatically, on a one-for-one basis, into a CLA Class A ordinary share, (2) immediately following the conversion described in clause (1), each of the then issued and outstanding 25,000,000 CLA Class A ordinary shares will convert automatically, on a one-for-one basis, into a share of Ouster PubCo common stock, (3) each of the then issued and outstanding 10,000,000 CLA warrants will convert automatically into a Ouster PubCo warrant, pursuant to the Warrant Agreement (4) each CLA unit will be cancelled and will entitle the holder thereof to one share of Ouster PubCo common stock and one-half of one Ouster PubCo warrant, and (5) each of the then issued and outstanding 6,000,000 private placement warrants of CLA will convert automatically into an Ouster PubCo warrant pursuant to the Warrant Agreement. No fractional Ouster PubCo warrants will be issued upon separation of the CLA units.

For further details, see “Domestication Proposal.”

Organizational Documents Proposal

If the BCA Proposal and the Domestication Proposal are approved, CLA will ask its shareholders to approve the Organizational Documents Proposal in connection with the replacement of the Cayman Constitutional Documents, under the Cayman Islands Companies Law, with the Proposed Organizational Documents, under the DGCL. CLA’s board has unanimously approved the Organizational Documents Proposal and believes such proposal is necessary to adequately address the needs of Ouster PubCo after the Business Combination. Approval of the Organizational Documents Proposal is a condition to the consummation of the Business Combination.

Advisory Organizational Documents Proposals

If the BCA Proposal, the Domestication Proposal and the Organizational Documents Proposals are approved, CLA will ask its shareholders to approve seven separate Advisory Organizational Documents Proposals in connection with the replacement of the Cayman Constitutional Documents, under the Cayman Islands Companies Law, with the Proposed Organizational Documents, under the DGCL. CLA’s board has unanimously approved the Advisory Organizational Documents Proposals and believes such proposals are



 

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necessary to adequately address the needs of Ouster PubCo after the Business Combination. Approval of the Advisory Organizational Documents Proposals is not a condition to the consummation of the Business Combination.

A brief summary of each of the Advisory Organizational Documents Proposals is set forth below. These summaries are qualified in their entirety by reference to the complete text of the Proposed Organizational Documents.

(A) Advisory Organizational Documents Proposal 4A—to authorize the change in the authorized capital stock of CLA from 200,000,000 Class A ordinary shares, 20,000,000 Class B ordinary shares, and 1,000,000 preference shares, to 1,000,000,000 shares of Ouster PubCo common stock and 100,000,000 shares of Ouster PubCo preferred stock;

(B) Advisory Organizational Documents Proposal 4B—to authorize adopting Delaware as the exclusive forum for certain stockholder litigation;

(C) Advisory Organizational Documents Proposal 4C—to authorize electing not to be governed by Section 203 of the DGCL relating to takeovers by interested stockholders and, instead, be governed by a provision substantially similar to Section 203 of the DGCL;

(D) Advisory Organizational Documents Proposal 4D—to approve provisions providing that the affirmative vote of at least two-thirds of the voting power of all the then outstanding shares of capital stock entitled to vote generally in the election of directors will be required for stockholders to (i) adopt, amend or repeal the Proposed Bylaws and (ii) amend, alter, repeal or rescind Articles V(B), VII, VIII, IX, X, XI, XII and XIII of the Proposed Certificate of Incorporation;

(E) Advisory Organizational Documents Proposal 4E—to approve provisions permitting the removal of a director only for cause and only by the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote at an election of directors;

(F) Advisory Organizational Documents Proposal 4F—to approve provisions requiring stockholders to take action at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting; and

(G) Advisory Organizational Documents Proposal 4G—to provide for certain additional changes, including, among other things, (i) changing the corporate name from “Colonnade Acquisition Corp.” to “Ouster, Inc.”, (ii) making Ouster PubCo’s corporate existence perpetual and (iii) removing certain provisions related to CLA’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which CLA’s board of directors believes is necessary to adequately address the needs of Ouster PubCo after the Business Combination.

The Proposed Organizational Documents differ in certain material respects from the Cayman Constitutional Documents and CLA encourages shareholders to carefully review the information set out in the section entitled “Advisory Organizational Documents Proposals” and the full text of the Proposed Organizational Documents of Ouster PubCo.

Stock Issuance Proposal

Assuming the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposal and the Incentive Award Plan Proposal are approved, CLA’s shareholders are also being asked to approve by ordinary resolution the Stock Issuance Proposal for purposes of complying with the applicable provisions of NYSE Listing Rule 312.03. For additional information, see “Stock Issuance Proposal.”



 

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Incentive Award Plan Proposal

Assuming the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposal and the Stock Issuance Proposal are approved, CLA’s shareholders are also being asked to approve by ordinary resolution the 2021 Plan. For additional information, see “Incentive Award Plan Proposal.”

Adjournment Proposal

If, based on the tabulated vote, there are not sufficient votes at the time of the extraordinary general meeting to authorize CLA to consummate the Business Combination (because any of the Condition Precedent Proposals have not been approved (including as a result of the failure of any other cross-conditioned Condition Precedent Proposals to be approved)), CLA’s board of directors may submit a proposal to adjourn the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies. For additional information, see “Adjournment Proposal.”

CLA’s Board of Directors’ Reasons for the Approval of the Business Combination

In considering the Business Combination, CLA’s board of directors considered multiple positive factors including the following, although not weighted or in any order of significance:

Superior Technology Compared to Alternatives. The CLA Board believes that Ouster’s digital lidar technology is superior to existing products on the market, with significantly lower cost as compared to legacy analog solutions and compelling price to performance capabilities that expand the potential uses of Ouster’s digital lidar technology. The CLA Board believes that these factors will enable Ouster to increase its market share and introduce its products into a variety of different markets.

Multiple Upside to Key Peers. Ouster’s post-transaction enterprise value-to-Adjusted EBITDA multiple of 6.2x and 2.8x for 2024 and 2025, respectively, further highlights upside as its peer group was priced at 2024/2025 enterprise value-to-Adjusted EBITDA multiples ranging from 7.8x to 36.6x.

Proven Management. Ouster’s management team is comprised of senior executives who are visionaries and market leaders in the lidar space, have public market chief financial officer experience, and who had the foresight to develop a business strategy and product that will enable them to be the high-performance, low cost provider in the lidar space.

Seller’s Retained Interest. Ouster’s existing shareholders are rolling 100% of their equity and will own an 81% stake in the pro forma company which shows an ongoing equity commitment.

PIPE Commitment. The PIPE Investors have committed to purchase $100 million in Ouster PubCo common stock at $10.00 per share. This shows market support for the Business Combination and reduces the minimum required cash from the trust account

For a more complete description of the CLA board of directors’ reasons for approving the Business Combination, including other factors and risks considered by the CLA board of directors, and additional information regarding Ouster’s projected financial information and calculation of Adjusted EBITDA, see the section entitled “BCA Proposal—CLA’s Board of Directors’ Reasons for the Approval of the Business Combination” and “BCA Proposal—Projected Financial Information.

Related Agreements

This section describes certain additional agreements entered into or to be entered into pursuant to the Merger Agreement. For additional information, see “BCA Proposal—Related Agreements.”



 

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Sponsor Support Agreement

In connection with the execution of the Merger Agreement, CLA, the Sponsor and Ouster entered into the Sponsor Support Agreement, dated as of December 21, 2020. Pursuant to the Sponsor Support Agreement, the Sponsor agreed to, among other things, vote to adopt and approve the Merger Agreement and all other documents and transactions contemplated thereby, in each case, subject to the terms and conditions of the Sponsor Support Agreement. For additional information, see “BCA Proposal—Related Agreements—Sponsor Support Agreement.

Ouster Holders Support Agreement

In connection with the execution of the Merger Agreement, CLA entered into a support agreement with Ouster and certain stockholders of Ouster. Pursuant to the Ouster Holders Support Agreement, Ouster Stockholders agreed to, among other things, vote to adopt and approve, upon the effectiveness of the Registration Statement, the Merger Agreement and all other documents and transactions contemplated thereby, in each case, subject to the terms and conditions of the Ouster Holders Support Agreement. Pursuant to the Ouster Holders Support Agreement, Ouster Stockholders also agreed to, among other things, (a) exercise the drag-along rights pursuant to and in accordance with that certain Amended and Restated Voting Agreement, dated as of April 3, 2020, by and among Ouster and the Investors (as defined therein) and (b) terminate certain affiliate agreements at the Closing. For additional information, see “BCA Proposal—Related Agreements—Ouster Holders Support Agreement.

Registration Rights Agreement

The Merger Agreement contemplates that, at the Closing, Ouster PubCo, Sponsor, certain members of the Sponsor, the Sponsor Related PIPE Investor and certain former stockholders of Ouster (the “Ouster Holders”) will enter into a Registration Rights Agreement, pursuant to which Ouster PubCo will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of Ouster PubCo common stock and other equity securities of Ouster PubCo that are held by the parties thereto from time to time. For additional information, see “BCA Proposal—Related Agreements—Registration Rights Agreement.

PIPE Subscription Agreements

In connection with the execution of the Merger Agreement, CLA entered into Subscription Agreements with the PIPE Investors, pursuant to which the PIPE Investors agreed to purchase, in the aggregate, 10,000,000 shares of Ouster PubCo common stock at $10.00 per share for an aggregate commitment amount of $100,000,000. The closings under the Subscription Agreements will occur substantially concurrently with the Closing. Additionally, pursuant to the Subscription Agreements, the PIPE Investors agreed to waive any claims that they may have at the Closing or in the future as a result of, or arising out of, the Subscription Agreements against CLA, including with respect to the trust account. For additional information, see “BCA Proposal—Related Agreements—PIPE Subscription Agreements.

Ownership of Ouster PubCo following Business Combination

As of the date of this proxy statement/prospectus, there are 25,000,000 ordinary shares issued and outstanding, which includes the 5,000,000 founder shares held by the Sponsor (whose members include CLA’s directors and officers) and the 20,000,000 public shares. As of the date of this proxy statement/prospectus, there is outstanding an aggregate of 16,000,000 warrants, which includes the 6,000,000 private placement warrants held by the Sponsor and 10,000,000 public warrants. Each whole warrant entitles the holder thereof to purchase one CLA Class A ordinary share and, following the Domestication, will entitle the holder thereof to purchase one



 

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share of Ouster PubCo common stock. Therefore, as of the date of this proxy statement/prospectus (without giving effect to the Business Combination), the CLA fully diluted share capital would be 41,000,000 ordinary shares.

It is anticipated that, following the Business Combination, (1) CLA’s public shareholders are expected to own approximately 12.5% of the outstanding Ouster PubCo common stock, (2) Ouster Stockholders (without taking into account any public shares held by the Ouster Stockholders prior to the consummation of the Business Combination or purchased in the PIPE Investment) are expected to own approximately 78.2% of the outstanding Ouster PubCo common stock, (3) the Sponsor and related parties (including the Sponsor Related PIPE Investor) are expected to collectively own approximately 3.8% of the outstanding Ouster PubCo common stock and (4) the Third Party PIPE Investors are expected to own approximately 5.5% of the outstanding Ouster PubCo common stock. These percentages assume (i) that no public shareholders exercise their redemption rights in connection with the Business Combination, (ii) (a) the vesting of all shares of Ouster PubCo common stock received in respect of the Ouster PubCo Restricted Shares, (b) the vesting and exercise of all Ouster PubCo Options for shares of Ouster PubCo common stock and (c) that Ouster PubCo issues shares of Ouster PubCo common stock as the Aggregate Merger Consideration pursuant to the Merger Agreement, which in the aggregate equals 150,000,000 shares of Ouster PubCo common stock (assuming that all Ouster PubCo Options are net-settled), and (iii) Ouster PubCo issues 10,000,000 shares of Ouster PubCo common stock to the PIPE Investors pursuant to the PIPE Investment. If the actual facts are different from these assumptions, the percentage ownership retained by the Company’s existing shareholders in the combined company will be different.

The following table illustrates varying ownership levels in Ouster PubCo immediately following the consummation of the Business Combination based on the assumptions above.

 

     Share Ownership in Ouster PubCo  
     No Redemption     Maximum
Redemption(1)
 

Stockholder

   Shares      %     Shares      %  

Former CLA Class A shareholders

     20,000,000        12.5       —          —    

Sponsor and related parties(2)

     6,175,000        3.8       6,175,000        4.4  

Former Ouster stockholders and warrant holders(3)

     125,196,001        78.2       125,196,001        89.3  

Third party investors in PIPE Investment(4)

     8,825,000        5.5       8,825,000        6.3  
  

 

 

    

 

 

   

 

 

    

 

 

 

Total shares of Ouster PubCo common stock outstanding at closing of the Business Combination(5)

     160,196,001        100.0     140,196,001        100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1)

Assumes redemptions of 20,000,000 public shares in connection with the Business Combination at approximately $10.00 per share based on trust account figures as of September 30, 2020.

(2)

Amount includes 5,000,000 shares of Ouster PubCo common stock the Sponsor will receive upon conversion of its Class B ordinary shares and 1,175,000 shares subscribed for by the Sponsor Related PIPE Investors.

(3)

Amount includes 4,608,216 shares of Ouster PubCo common stock subject to repurchase related to the conversion of all outstanding shares of Ouster unvested restricted shares and early exercised stock options subject to repurchase and 5,233,766 shares of Ouster PubCo common stock related to shares of Ouster common stock issued upon early exercise of Ouster stock options in exchange for non-recourse notes, which will be repaid or forgiven at the time of closing of the Business Combination.

(4)

Amount includes 1,250,000 shares of Ouster PubCo common stock subscribed for by current stockholders of Ouster.

(5)

The figures in this table are presented only as illustrative examples and are based on the assumptions described above, which may be different from the actual amount of redemptions in connection with the Business Combination. In the event that CLA Class A ordinary shares are redeemed in connection with the Business Combination but the number of shares redeemed is less than 20,000,000, the ownership percentages set forth above will vary on a linear basis between the two scenarios.



 

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Date, Time and Place of Extraordinary General Meeting of CLA’s Shareholders

The extraordinary general meeting of the shareholders of CLA will be held at 10:00 am, Eastern Time, on March 9, 2021, at the offices of White & Case LLP at 1221 Avenue of the Americas, New York, New York 10020, or virtually via live webcast at https://www.cstproxy.com/colonnadeacquisition/sm2021, to consider and vote upon the proposals to be put to the extraordinary general meeting, including if necessary, the Adjournment Proposal, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the extraordinary general meeting, each of the Condition Precedent Proposals have not been approved.

Registering for the Special Meeting

Any shareholder wishing to attend the extraordinary general meeting should register for the extraordinary general meeting by March 3, 2021 at 5:00 pm, Eastern Time. To register for the extraordinary general meeting, please follow these instructions as applicable to the nature of your ownership of ordinary shares:

 

   

If your shares are registered in your name with Continental Stock Transfer & Trust Company and you wish to attend the online-only meeting, go to https://www.cstproxy.com/colonnadeacquisition/sm2021, enter the 12-digit control number included on your proxy card or notice of the extraordinary general meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the extraordinary general meeting you will need to log back into the extraordinary general meeting site using your control number. Pre-registration is recommended but is not required in order to attend.

 

   

Beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the extraordinary general meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial shareholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the extraordinary general meeting. After contacting Continental Stock Transfer & Trust Company, a beneficial holder will receive an e-mail prior to the extraordinary general meeting with a link and instructions for entering the extraordinary general meeting. Beneficial shareholders should contact Continental Stock Transfer & Trust Company at least five (5) business days prior to the extraordinary general meeting date in order to ensure access.

Voting Power; Record Date

CLA shareholders will be entitled to vote or direct votes to be cast at the extraordinary general meeting if they owned ordinary shares at the close of business on February 8, 2021, which is the record date for the extraordinary general meeting. Shareholders will have one vote for each ordinary share owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. CLA warrants do not have voting rights. As of the close of business on the record date, there were 25,000,000 ordinary shares outstanding, of which 20,000,000 were public shares, with the rest being held by CLA’s initial shareholders.

Quorum and Vote of CLA Shareholders

A quorum of CLA shareholders is necessary to hold a valid meeting. A quorum will be present at the CLA general meeting if the holders of a majority of the issued and outstanding shares entitled to vote at the extraordinary general meeting are represented in person or by proxy (which would include presence at the extraordinary general meeting). Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the extraordinary general meeting.



 

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As of the record date for the extraordinary general meeting, 12,500,001 ordinary shares would be required to achieve a quorum.

The Sponsor has agreed to vote all of its ordinary shares in favor of the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/prospectus, the Sponsor (whose members include CLA’s directors and officers) owns 20% of the issued and outstanding ordinary shares.

The proposals presented at the extraordinary general meeting require the following votes:

 

   

BCA Proposal: The approval of the BCA Proposal requires an ordinary resolution, being the affirmative vote for the proposal by the holders of a majority of the ordinary shares who, being present and entitled to vote at the extraordinary general meeting to approve the BCA Proposal, vote at the extraordinary general meeting.

 

   

Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under the Cayman Islands Companies law, being the affirmative vote for the proposal by the holders of a majority of at least two-thirds of the ordinary shares who, being present and entitled to vote at the extraordinary general meeting to approve the Domestication Proposal, vote at the extraordinary general meeting.

 

   

Organizational Documents Proposal: The approval of the Organizational Documents Proposal requires a special resolution under the Cayman Islands Companies Law, being the affirmative vote for the proposal by the holders of a majority of at least two-thirds of the ordinary shares who, being present and entitled to vote at the extraordinary general meeting to approve the Organizational Documents Proposal, vote at the extraordinary general meeting.

 

   

Advisory Organizational Documents Proposals: The separate approval of each of the Advisory Organizational Documents Proposals, each of which is a non-binding vote, requires a special resolution under the Cayman Islands Companies Law, being the affirmative vote for each of the Advisory Organizational Documents Proposals by the holders of a majority of at least two-thirds of the ordinary shares who, being present and entitled to vote at the extraordinary general meeting to approve each such Advisory Organizational Documents Proposal, vote at the extraordinary general meeting.

 

   

Stock Issuance Proposal: The approval of the Stock Issuance Proposal requires an ordinary resolution, being the affirmative vote for the proposal by the holders of a majority of the ordinary shares who, being present and entitled to vote at the extraordinary general meeting to approve the Stock Issuance Proposal, vote at the extraordinary general meeting.

 

   

Incentive Award Plan Proposal: The approval of the Incentive Award Plan Proposal requires an ordinary resolution, being the affirmative vote for the proposal by the holders of a majority of the ordinary shares who, being present and entitled to vote at the extraordinary general meeting to approve the Incentive Award Plan Proposal, vote at the extraordinary general meeting.

 

   

Adjournment Proposal: The approval of the Adjournment Proposal requires an ordinary resolution, being the affirmative vote for the proposal by the holders of a majority of the ordinary shares who, being present and entitled to vote at the extraordinary general meeting to approve the Adjournment Proposal, vote at the extraordinary general meeting.

Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the extraordinary general meeting.



 

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Redemption Rights

Pursuant to the Cayman Constitutional Documents, a public shareholder may request of CLA that Ouster PubCo redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a holder of public shares, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

   

hold public shares or if you hold public shares through units, you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares;

 

   

submit a written request to Continental Stock Transfer & Trust Company (“Continental”), CLA’s transfer agent, that Ouster PubCo redeem all or a portion of your public shares for cash; and

 

   

deliver the certificates for your public shares (if any) along with the redemption forms to Continental physically or electronically through DTC.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 pm, Eastern Time, on March 5, 2021 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

Holders of units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact Continental directly and instruct them to do so. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the BCA Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers the certificates for its shares (if any) along with the redemption forms to Continental, Ouster PubCo will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account, calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of September 30, 2020, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and, accordingly, it is shares of Ouster PubCo common stock that will be redeemed immediately after consummation of the Business Combination. See “Extraordinary General Meeting of CLA—Redemption Rights” in this proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

The Sponsor has agreed to vote in favor of the Business Combination, regardless of how CLA’s public shareholders vote. The Sponsor and each director and each officer of CLA have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in the case of the Sponsor, subject also to the terms and conditions contemplated by the Sponsor Support Agreement. As of the date of this



 

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proxy statement/prospectus, the Sponsor (whose members include CLA’s directors and officers) owns 20% of the issued and outstanding ordinary shares.

Holders of the warrants will not have redemption rights with respect to the warrants.

Appraisal Rights

Neither CLA shareholders nor CLA warrant holders have appraisal rights in connection with the Business Combination or the Domestication under Cayman Islands law or under the DGCL.

Proxy Solicitation

Proxies may be solicited by mail, telephone or in person. CLA has engaged Morrow Sodali LLC to assist in the solicitation of proxies.

If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the extraordinary general meeting. A shareholder also may change its vote by submitting a later-dated proxy as described in the section entitled “Extraordinary General Meeting of CLA—Revoking Your Proxy.”

Interests of CLA Directors and Officers in the Business Combination

When you consider the recommendation of CLA’s board of directors in favor of approval of the BCA Proposal, you should keep in mind that the Sponsor and CLA’s directors and executive officers have interests in such proposal that are different from, or in addition to, those of CLA shareholders and warrant holders generally. These interests include, among other things, the interests listed below:

 

   

Prior to CLA’s initial public offering, the Sponsor purchased 5,750,000 CLA Class B ordinary shares for an aggregate purchase price of $25,000, or approximately $0.005 per share. As a result of the significantly lower investment per share of our Sponsor as compared with the investment per share of CLA’s public shareholders, a transaction which results in an increase in the value of the investment of the Sponsor may result in a decrease in the value of the investment of our public shareholders. In addition, if CLA does not consummate a business combination by August 25, 2022 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, liquidating and dissolving, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such event, the 5,000,000 CLA Class B ordinary shares owned by the Sponsor would be worthless because following the redemption of the public shares, CLA would likely have few, if any, net assets and because the Sponsor and CLA’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any CLA Class A ordinary shares and CLA Class B ordinary shares held by it or them, as applicable, if CLA fails to complete a business combination within the required period. Additionally, in such event, the 6,000,000 private placement warrants purchased by the Sponsor simultaneously with the consummation of CLA’s initial public offering for an aggregate purchase price of $6,000,000 will also expire worthless. CLA’s directors and executive officers, Joseph S. Sambuco, Remy W. Trafelet, James C. Flores, Emil W. Henry, Jr. and Manny De Zárraga, also have a direct or indirect economic interest in such private placement warrants and in the 5,000,000 CLA Class B ordinary shares owned by the Sponsor. The 5,000,000 shares of Ouster PubCo common stock into which the 5,000,000 CLA Class B ordinary shares held by the Sponsor will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and



 

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freely tradable, would have had an aggregate market value of $76.6 million based upon the closing price of $15.31 per public share on the NYSE on February 9, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. However, given that such shares of Ouster PubCo common stock will be subject to certain restrictions, including those described elsewhere in this proxy statement/prospectus, CLA believes such shares have less value. The 6,000,000 Ouster PubCo warrants into which the 6,000,000 private placement warrants held by the Sponsor will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $21.0 million based upon the closing price of $3.50 per public warrant on the NYSE on February 9, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus.

 

   

Remy W. Trafelet, a current director of CLA, is expected to be a director of Ouster PubCo after the consummation of the Business Combination. As such, in the future, Mr. Trafelet may receive fees for his service as a director, which may consist of cash or stock-based awards, and any other remuneration that Ouster PubCo’s board of directors determines to pay to its non-employee directors.

 

   

CLA’s existing directors and officers will be eligible for continued indemnification and continued coverage under CLA’s directors’ and officers’ liability insurance after the Merger and pursuant to the Merger Agreement.

 

   

The Sponsor Related PIPE Investor has subscribed for $11,750,000 of the PIPE Investment, for which it will receive 1,175,000 shares of Ouster PubCo common stock. The 1,175,000 shares of Ouster PubCo common stock which the Sponsor Related PIPE Investor has subscribed for in the PIPE Investment, if unrestricted and freely tradable, would have had an aggregate market value of approximately $18.0 million based upon the closing price of $15.31 per public share on the NYSE on February 9, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. See “Certain Relationships and Related Person Transactions—CLA—Subscription Agreements”.

 

   

In order to protect the amounts held in CLA’s trust account, the Sponsor has agreed that it will be liable to CLA if and to the extent any claims by a third party for services rendered or products sold to CLA, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, less taxes payable, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under the indemnity of the underwriters of CLA’s initial public offering against certain liabilities, including liabilities under the Securities Act.

 

   

CLA’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them related to identifying, investigating, negotiating and completing an initial business combination. However, if CLA fails to consummate a business combination by August 25, 2022, they will not have any claim against the trust account for reimbursement. Accordingly, CLA may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by such date.

 

   

Pursuant to the Registration Rights Agreement, the Sponsor, certain members of the Sponsor and the Sponsor Related PIPE Investor will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect to the shares of Ouster PubCo common stock and warrants held by such parties following the consummation of the Business Combination.



 

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The Proposed Certificate of Incorporation will contain a provision expressly electing that Ouster PubCo will not to be governed by Section 203 (Delaware’s “interested stockholder” statute) of the DGCL, although it will provide other restrictions regarding takeovers by interested stockholders.

The Sponsor has agreed to vote in favor of the Business Combination, regardless of how CLA’s public shareholders vote. The Sponsor and each director and each officer of CLA have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in the case of the Sponsor, subject also to the terms and conditions contemplated by the Sponsor Support Agreement. As of the date of this proxy statement/prospectus, the Sponsor (whose members include CLA’s directors and officers) owns 20% of the issued and outstanding ordinary shares.

At any time at or prior to the Business Combination, during a period when they are not then aware of any material non-public information regarding CLA or CLA’s securities, the Sponsor, Ouster our or their respective directors, officers, advisors or respective affiliates may purchase public shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares or vote their public shares in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of CLA’s shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, Ouster or their respective directors, officers, advisors or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of (1) satisfaction of the requirement that holders of a majority of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the BCA Proposal, the Stock Issuance Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal, (2) satisfaction of the requirement that holders of a majority of at least two-thirds of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the Domestication Proposal, the Organizational Documents Proposal, and the Advisory Organizational Documents Proposals, (3) satisfaction of the Minimum Cash Condition, (4) otherwise limiting the number of public shares electing to redeem and (5) CLA’s net tangible assets being at least $5,000,001.

Entering into any such arrangements may have a depressive effect on the ordinary shares (e.g., by giving an investor or holder the ability to effectively purchase shares at a price lower than market, such investor or holder may therefore become more likely to sell the shares he or she owns, either at or prior to the Business Combination). If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved.

The existence of financial and personal interests of one or more of CLA’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of CLA and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, CLA’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “—Interests of CLA’s Directors and Officers in the Business Combination” for a further discussion of these considerations.

The personal and financial interests of the Sponsor as well as CLA’s directors and officers may have influenced their motivation in identifying and selecting Ouster as a business combination target, completing an



 

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initial business combination with Ouster and influencing the operation of the business following the initial business combination. In considering the recommendations of CLA’s board of directors to vote for the proposals, its shareholders should consider these interests.

Recommendation to Shareholders of CLA

CLA’s board of directors believes that the BCA Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of CLA’s shareholders and unanimously recommends that its shareholders vote “FOR” the approval of the BCA Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Organizational Documents Proposal, “FOR” the approval, on an advisory basis, of each of the separate Advisory Organizational Documents Proposals, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Award Plan Proposal and “FOR” the approval of the Adjournment Proposal, in each case, if presented to the extraordinary general meeting.

The existence of financial and personal interests of one or more of CLA’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of CLA and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, CLA’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of CLA’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

Sources and Uses of Funds for the Business Combination

The following table summarizes the sources and uses for funding the Business Combination. These figures assume (i) that none of CLA’s public shareholders exercise their redemption rights and (ii) that Ouster PubCo issues or, as applicable, reserves for issuance in respect of Ouster Awards outstanding as of immediately prior to the Closing that will be converted into awards based on Ouster PubCo common stock, an aggregate of 125,196,001 shares of Ouster PubCo common stock as the Aggregate Merger Consideration pursuant to the Merger Agreement (assuming that all Ouster PubCo Options are net-settled). If the actual facts are different from these assumptions, the below figures will be different.

 

Sources

          

Uses

 
($ in millions)                         

Ouster stockholders rollover(1)

   $ 1,500       

Ouster stockholders rollover(1)

   $ 1,500  

Cash and investments held in trust account(2)

     200        Cash to balance sheet      260  
     Promissory note(4)      5  

PIPE Investment

     100        Transaction expenses(3)      35  
  

 

 

         

 

 

 

Total sources

   $ 1,800        Total uses    $ 1,800  

 

(1)

Ouster PubCo common stock to be issued at a deemed value of $10.00 per share.

(2)

Calculated as of November 30, 2020.

(3)

Includes deferred underwriting commission of approximately $7 million and estimated transaction expenses.

(4)

Amount only reflects principal amount of the promissory note issued by Ouster to certain of its current investors (or an affiliate thereof) in January 2021 and to be repaid in connection with the consummation of the Business Combination. Interest will accrue on the note at a rate of LIBOR plus 8.5% per annum from the date of issuance until repayment at consummation of the Business Combination.

U.S. Federal Income Tax Considerations

For a discussion summarizing certain U.S. federal income tax considerations of the Domestication and an exercise of redemption rights in connection with the Business Combination, please see “U.S. Federal Income Tax Considerations.”



 

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Expected Accounting Treatment

The Domestication

There will be no accounting effect or change in the carrying amount of the consolidated assets and liabilities of the Company as a result of the Domestication. The business, capitalization, assets and liabilities and financial statements of Ouster PubCo immediately following the Domestication will be the same as those of CLA immediately prior to the Domestication.

The Business Combination

We expect the Business Combination to be accounted for as a reverse recapitalization in accordance with GAAP. Under the guidance in ASC 805, CLA is expected to be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination is expected to be reflected as the equivalent of Ouster issuing stock for the net assets of CLA, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded.

Regulatory Matters

Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (“FTC”), certain transactions may not be consummated unless information has been furnished to the Antitrust Division of the Department of Justice (“Antitrust Division”) and the FTC and certain waiting period requirements have been satisfied. The Business Combination is subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the two filings of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted. On January 6, 2021, CLA and Ouster filed the required forms under the HSR Act with respect to the Business Combination with the Antitrust Division and the FTC and requested early termination. On February 5, 2021, the 30-day waiting period expired.

At any time before or after consummation of the Business Combination, notwithstanding termination of the respective waiting periods under the HSR Act, the Antitrust Division or the FTC, or any state or foreign governmental authority could take such action under applicable antitrust laws as such authority deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination, conditionally approving the Business Combination upon divestiture of assets, subjecting the completion of the Business Combination to regulatory conditions or seeking other remedies. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. CLA cannot assure you that the Antitrust Division, the FTC, any state attorney general or any other government authority will not attempt to challenge the Business Combination on antitrust grounds, and, if such a challenge is made, CLA cannot assure you as to its result.

Neither CLA nor Ouster are aware of any material regulatory approvals or actions that are required for completion of the Business Combination other than the expiration or early termination of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.

Emerging Growth Company

CLA is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not



 

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being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in CLA’s periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. CLA has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, CLA, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of CLA’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

CLA will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of CLA’s initial public offering, (b) in which CLA has total annual gross revenue of at least $1.07 billion or (c) in which CLA is deemed to be a large accelerated filer, which means the market value of CLA’s common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which CLA has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.

Additionally, CLA is a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. CLA will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of its common equity held by non-affiliates exceeds $700 million as of the prior June 30th or (2) the market value of its common equity exceeds $250 million and its annual revenues exceeds $100 million during such fiscal year.

Risk Factors

In evaluating the proposals to be presented at the extraordinary general meeting, shareholders should carefully read this proxy statement/prospectus and especially consider the factors discussed in the sections titled “Risk Factor Summary” and “Risk Factors.”



 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF CLA

CLA is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the Business Combination.

CLA’s condensed statement of operations data the period from June 4, 2020 (inception) to September 30, 2020 and balance sheet data as of September 30, 2020 are derived from CLA’s unaudited condensed financial statements included elsewhere in this proxy statement/prospectus.

CLA’s historical results are not necessarily indicative of the results that may be expected in the future and CLA’s results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020 or any other period. The information below is only a summary and should be read in conjunction with the sections entitled “CLA’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Information About CLA” and the financial statements, and the notes related thereto, which are included elsewhere in this proxy statement/prospectus.

CLA is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the Business Combination.

 

Statement of Operations Data

   For the Period
from
June 4, 2020
(Inception) through
September 30, 2020
 
     (dollars in thousands,
except per share numbers)
 

Operating Costs

   $ 61  
  

 

 

 

Loss from operations

     (61

Other income (expense):

  

Interest earned on marketable securities held in Trust Account

     16  

Unrealized loss on marketable securities held in Trust Account

     (14
  

 

 

 

Other income, net

     2  

Net loss

   $ (59
  

 

 

 

Weighted average shares outstanding, basic and diluted

     5,409,457  
  

 

 

 

Basic and diluted net loss per ordinary share

   $ (0.01
  

 

 

 

 

Balance Sheet Data

   September 30, 2020  
     (dollars in thousands)  

Total assets

   $ 201,468  

Total liabilities

     7,100  

Total shareholders’ equity

     5,000  


 

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SELECTED HISTORICAL FINANCIAL INFORMATION AND OPERATING DATA OF OUSTER

The following table shows selected historical financial information of Ouster for the periods and as of the dates indicated.

The selected historical consolidated statements of operations and comprehensive loss data and historical consolidated statements of cash flow data of Ouster for the years ended December 31, 2018 and 2019 and the historical consolidated balance sheet data as of December 31, 2018 and 2019 are derived from Ouster’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus. The selected historical condensed consolidated statements of operations and comprehensive loss data and historical consolidated statements of cash flow data of Ouster for the nine months ended September 30, 2019 and 2020 and the condensed consolidated balance sheet data as of September 30, 2020 are derived from Ouster’s unaudited interim condensed consolidated financial statements included elsewhere in this proxy statement/prospectus. In the opinion of Ouster’s management, the unaudited interim condensed consolidated financial statements include all adjustments necessary to state fairly Ouster’s financial position as of September 30, 2020 and the results of operations and cash flows for the nine months ended September 30, 2019 and 2020.

The financial information contained in this section relates to Ouster, prior to and without giving pro forma effect to the impact of the Business Combination and, as a result, the results reflected in this section may not be indicative of the results of the post-combination company going forward. See the section titled “Selected Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this proxy statement/prospectus.



 

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Additionally, the following selected historical financial information should be read together with the consolidated financial statements and accompanying notes and “Ouster’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this proxy statement/prospectus. The selected historical financial information in this section is not intended to replace Ouster’s consolidated financial statements and the related notes. Ouster’s historical results are not necessarily indicative of the results that may be expected in the future and Ouster’s results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020 or any other period.

 

     Year Ended
December 31,
    Nine Months Ended
September 30,
 
     2018     2019     2019     2020  
     (in thousands, except per share data)  

Consolidated Statement of Operations and Comprehensive Loss Data

        

Revenue

   $ 1,345     $ 11,413     $ 9,327     $ 12,528  

Cost of revenue(1)

     3,541       17,428       9,825       12,988  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross loss

     (2,196     (6,015     (498     (460
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses(1)

     29,832       42,348       29,213       37,189  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (32,028     (48,363     (29,711     (37,649

Total other expense, net

     (777     (3,297     (2,132     (11,971
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (32,805     (51,660     (31,843     (49,620

Provision for income tax expense

     1       1       —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (32,806   $ (51,661   $ (31,843   $ (49,620
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average common shares outstanding

        

Basic

     7,979       10,510       10,352       22,402  

Diluted

     7,979       10,510       10,352       22,402  

Net loss per common share

        

Basic

   $ (4.11   $ (4.92   $ (3.08   $ (2.21

Diluted

   $ (4.11   $ (4.92   $ (3.08   $ (2.21

 

     Year Ended
December 31,
     Nine Months Ended
September 30,
 
     2018      2019      2019          2020      
     (dollars in thousands)  

Stock-based Compensation

           

Cost of revenue

   $ 95      $ 58      $ 46      $ 310  

Research and development

     156        621        456        5,472  

Sales and marketing

     58        140        67        408  

General and administrative

     215        474        447        1,701  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation

   $ 524      $ 1,293      $ 1,016      $ 7,891  
  

 

 

    

 

 

    

 

 

    

 

 

 


 

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     As of
December 31,
    As of
September 30,
 
     2018     2019     2020  
     (dollars in thousands)  

Consolidated Balance Sheet Data

      

Cash and cash equivalents

   $ 13,438     $ 16,848     $ 18,367  

Working capital(2)

     13,892       (18,869     19,167  

Total assets

     26,787       39,859       50,878  

Redeemable convertible preferred stock

     40,016       40,016       39,225  

Total stockholders’ deficit

     (50,236     (100,319     (23,624

 

     Year Ended
December 31,
    Nine Months Ended
September 30,
 
     2018     2019     2019     2020  
     (dollars in thousands)  

Consolidated Statement of Cash Flow Data

        

Net cash provided by (used in):

        

Operating activities

   $ (27,801   $ (40,187   $ (25,695   $ (34,631

Investing activities

     (6,491     (7,494     (6,985     (2,394

Financing activities

     29,188       50,505       41,819       38,543  

 

(1)

Includes stock-based compensation expense as detailed above.

(2)

Working capital calculated as current assets minus current liabilities.



 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following selected unaudited pro forma condensed combined financial data (the “selected pro forma information”) gives effect to Ouster becoming a wholly owned subsidiary of Ouster PubCo as a result of Merger Sub, a direct wholly owned subsidiary of CLA, merging with and into Ouster, with Ouster surviving as a wholly owned subsidiary of Ouster PubCo (the “Transaction”) and other events contemplated by the Merger Agreement as described in the section titled “Unaudited Pro Forma Condensed Combined Financial Information.” The Transaction will be accounted for as a reverse recapitalization under accounting principles generally accepted in the United States of America (“GAAP”). Under this method of accounting, CLA is treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Ouster PubCo will represent a continuation of the financial statements of Ouster with the Transaction being treated as the equivalent of Ouster issuing stock for the net assets of CLA, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations prior to the Transaction will be presented as those of Ouster in future reports of Ouster PubCo.

The selected unaudited pro forma condensed combined balance sheet data as of September 30, 2020 gives pro forma effect to the Transaction and other events contemplated by the Merger Agreement as if it had occurred on September 30, 2020. The selected unaudited pro forma condensed combined statement of operations data for the nine months ended September 30, 2020 and year ended December 31, 2019 gives pro forma effect to the Transaction and other events contemplated by the Merger Agreement as if it had occurred on January 1, 2019.

The selected pro forma information has been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information of Ouster PubCo appearing elsewhere in this proxy statement/prospectus and the accompanying notes, in the section titled “Unaudited Pro Forma Condensed Combined Financial Information.” The unaudited pro forma condensed combined financial information is derived from, and should be read in conjunction with, the historical financial statements of CLA and Ouster and related notes included elsewhere in this proxy statement/prospectus. The selected pro forma information has been presented for informational purposes only and is not necessarily indicative of what Ouster PubCo’s financial position or results of operations actually would have been had the Transaction and other events contemplated by the Merger Agreement been completed as of the dates indicated. In addition, the selected pro forma information does not purport to project the future financial position or operating results of Ouster PubCo.

The following table presents selected pro forma information after giving effect to the Transaction and other events contemplated by the Merger Agreement, presented under two scenarios:

 

   

No Redemption Scenario — this scenario assumes that no CLA Class A ordinary shares are redeemed; and

 

   

Maximum Redemption Scenario — this scenario assumes that 20,000,000 CLA Class A ordinary shares are redeemed for an aggregate payment of $200.0 million, which is derived from the number of shares that could be redeemed in connection with the Transaction at an assumed redemption price of approximately $10.00 per share of Ouster PubCo common stock based on the trust account balance as of September 30, 2020 in order for the amount of cash available in the trust account following the extraordinary general meeting plus the PIPE Investment amount actually received by CLA at or prior to the Closing Date to be at least equal to $100.0 million.



 

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The following summarizes the pro forma shares of Ouster PubCo common stock issued and outstanding immediately after the Transaction, presented under the two scenarios:

 

     No Redemption      Maximum Redemption  

Stockholder

   Shares      %      Shares      %  

Former CLA Class A shareholders

     20,000,000        12.5        —          —    

Sponsor and related parties(1)

     6,175,000        3.8        6,175,000        4.4  

Former Ouster stockholders and warrant holders(2)

     125,196,001        78.2        125,196,001        89.3  

Third party investors in PIPE Investment(3)

     8,825,000        5.5        8,825,000        6.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total shares of Ouster PubCo common stock outstanding at closing of the Transaction(4)

     160,196,001        100.0        140,196,001        100.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Amount includes 5,000,000 shares of Ouster PubCo common stock the Sponsor will receive upon conversion of its Class B ordinary shares and 1,175,000 shares subscribed for by the Sponsor Related PIPE Investors.

(2)

Amount includes 4,608,216 shares of Ouster PubCo common stock subject to repurchase related to the conversion of all outstanding shares of Ouster unvested restricted shares and early exercised stock options subject to repurchase and 5,233,766 shares of Ouster PubCo common stock related to shares of Ouster common stock issued upon early exercise of Ouster stock options in exchange for non-recourse notes, which will be repaid or forgiven at the time of closing of the Transaction.

(3)

Amount includes 1,250,000 shares of Ouster PubCo common stock subscribed for by current stockholders of Ouster.

(4)

The figures in this table are presented only as illustrative examples and are based on the assumptions described above, which may be different from the actual amount of redemptions in connection with the Transaction. In the event that CLA Class A ordinary shares are redeemed in connection with the Transaction but the number of shares redeemed is less than 20,000,000, the ownership percentages set forth above will vary on a linear basis between the two scenarios.



 

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The two alternative levels of additional redemptions assumed in the unaudited pro forma condensed combined balance sheets and statement of operations are based on the assumption that there are no adjustments for the outstanding CLA warrants issued in connection with its IPO as such securities are not exercisable until 30 days after the Closing.

The following summary data derived from the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2020 and the year ended December 31, 2019 and the summary data derived from the unaudited pro forma condensed combined balance sheets as of September 30, 2020 under the no redemption scenario and maximum redemption scenario are based on the historical financial statements of CLA and Ouster. If the actual facts are different than these assumptions, then the amounts and shares outstanding in the unaudited pro forma condensed combined financial information that follows will be different and those changes could be material.

 

(in thousands, except share and per share data)    No Redemption     Maximum
Redemption
 

Summary Unaudited Pro Forma Condensed Combined Statement of Operations Data

    

For the nine months ended September 30, 2020

    

Revenue

   $ 12,528     $ 12,528  

Net loss

   $ (43,584   $ (43,584

Net loss per share—basic and diluted

   $ (0.29   $ (0.33

Weighted-average Common Stock shares outstanding—basic and diluted

     150,354,018       130,354,018  

Summary Unaudited Pro Forma Condensed Combined Statement of Operations Data

    

For the year ended December 31, 2019

    

Revenue

   $ 11,413     $ 11,413  

Net loss

   $ (51,661   $ (51,661

Net loss per share—basic and diluted

   $ (0.34   $ (0.40

Weighted-average Common Stock shares outstanding—basic and diluted

     150,354,018       130,354,018  

Summary Unaudited Pro Forma Condensed Combined

    

Balance Sheet Data as of September 30, 2020

    

Total assets

   $ 316,976     $ 116,974  

Total liabilities

   $ 28,427     $ 28,427  

Total stockholders’ equity

   $ 288,549     $ 88,547  


 

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COMPARATIVE SHARE INFORMATION

The following table sets forth summary historical comparative share information for CLA and Ouster, respectively and unaudited pro forma condensed combined per share information of Ouster PubCo after giving effect to the Transaction and other events contemplated by the Merger Agreement presented under two scenarios:

 

   

No Redemption Scenario — this scenario assumes that no CLA Class A ordinary shares are redeemed; and

 

   

Maximum Redemption Scenario — this scenario assumes that 20,000,000 CLA Class A ordinary shares are redeemed for an aggregate payment of $200.0 million, which is derived from the number of shares that could be redeemed in connection with the Transaction at an assumed redemption price of approximately $10.00 per share of Ouster PubCo common stock based on the trust account balance as of September 30, 2020 in order for the amount of cash available in the trust account following the extraordinary general meeting plus the PIPE Investment amount actually received by CLA at or prior to the Closing Date to be at least equal to $100.0 million.

The pro forma book value information reflects the Transaction as if it had occurred on September 30, 2020. The pro forma weighted average shares outstanding and net loss per share information reflect the Transaction as if it had occurred on January 1, 2019.

This information is only a summary and should be read in conjunction with the historical financial statements of CLA and Ouster and related notes included elsewhere in this proxy statement/prospectus. The unaudited pro forma combined per share information of CLA and Ouster is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information and related notes included elsewhere in this proxy statement/prospectus in the section titled “Unaudited Pro Forma Condensed Combined Financial Information.”



 

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The unaudited pro forma combined income (loss) per share information below does not purport to represent the income (loss) per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of CLA and Ouster would have been had the companies been combined during the periods presented.

 

    Colonnade     Ouster, Inc.     Pro Forma Combined     Ouster equivalent pro
forma per share data(7)
 
    Historical     Pro Forma,
Assuming
No
Redemption
    Pro Forma,
Assuming
Maximum
Redemption
    Historical     Pro Forma     Assuming
No
Redemption
    Assuming
Maximum
Redemption
    No
Redemption
    Maximum
Redemption
 

As of and for the nine months ended September 30, 2020(4)

                 

Book Value per share(1)

  $ 0.73     $         8.41     $         6.29     $ (0.78   $         0.01     $ 1.80     $ 0.63     $ 1.26     $ 0.44  

Basic and diluted net loss per ordinary share(2)

    (0.01             (0.29     (0.33     (0.20     (0.23

Weighted average shares outstanding—basic and diluted(3)

    5,409,457               150,354,018       130,354,018       97,932,650       97,932,650  

Net loss per Ouster common stock—basic and diluted

          (2.21          

Weighted average shares outstanding of Ouster common stock—basic and diluted

          22,402,328            

As of and for the Year Ended December 31, 2019(4)

                 

Book Value per share(1)

  $ N/A (5)        $ (8.93       N/A (6)      N/A (6)      N/A (6)      N/A (6) 

Basic and diluted net loss per ordinary share(2)

    N/A (5)              (0.34     (0.40     (0.24     (0.28

Weighted average shares outstanding—basic and diluted(3)

    N/A (5)              150,354,018       130,354,018       89,619,859       89,619,859  

Net loss per Ouster common stock—basic and diluted

          (4.92          

Weighted average shares outstanding of Ouster common stock—basic and diluted

          10,509,923            

 

(1)

CLA historical book value per share is calculated as (a) total permanent equity divided by (b) the total number of CLA ordinary shares outstanding classified in permanent equity as of September 30, 2020. CLA pro forma book value per share assuming no redemptions is calculated as (a) pro forma permanent equity divided by (b) the total number of CLA ordinary shares outstanding classified in permanent equity as of September 30, 2020 that are assumed to be exchanged for shares of CLA common stock following the change of jurisdiction of incorporation from Cayman Islands to the State of Delaware and adjusted for the forfeiture of 750,000 CLA Class B ordinary shares forfeited in October 2020



 

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  since CLA’s underwriters did not exercise their over-allotment option and the issuance of 10,000,000 in shares of common stock pursuant to the PIPE investment. CLA pro forma book value per share assuming maximum redemptions is calculated as (a) pro forma permanent equity divided by (b) the total number of CLA ordinary shares outstanding classified in permanent equity as of September 30, 2020 that are assumed to be exchanged for shares of CLA common stock following the change of jurisdiction of incorporation from Cayman Islands to the State of Delaware and adjusted for the forfeiture of 750,000 CLA Class B ordinary shares forfeited in October 2020 and the issuance of 10,000,000 in shares of common stock pursuant to the PIPE investment and adjusted for exclusion of 20,000,000 CLA Class A ordinary shares under maximum redemption scenario. Ouster historical book value per share is calculated as (a) total permanent equity divided by (b) the total number shares of Ouster common stock outstanding as of September 30, 2020. Ouster pro forma book value per share is calculated as (a) pro forma permanent equity divided by (b) 30,104,919 of shares of Ouster common stock outstanding as of September 30, 2020 adjusted for the issuance of 6,019,160 shares of Ouster redeemable convertible preferred stock upon the net share settlement of warrants and conversion into shares of Ouster common stock on a 1-to-1 basis and conversion of 125,762,535 shares of Ouster redeemable convertible preferred stock into shares of Ouster common stock on a 1-to-1 basis. Pro forma combined book value per share is calculated as (a) pro forma equity divided by (b) the total number of shares of Ouster PubCo common stock outstanding immediately after the Transaction and other events contemplated by the Merger Agreement.
(2)

Net loss per ordinary share – basic and diluted excludes income attributable to CLA ordinary shares subject to possible redemption of $1,659 for the period from June 4, 2020 (inception) through September 30, 2020.

(3)

Excludes an aggregate of 18,936,619 CLA Class A ordinary shares subject to possible redemption and an aggregate of up to 750,000 CLA Class B ordinary shares forfeited in October 2020 since CLA’s underwriters did not exercise their over-allotment option.

(4)

There were no cash dividends declared for either CLA or Ouster in the period presented.

(5)

Not applicable as CLA was incorporated on June 4, 2020.

(6)

Pro forma balance sheet information as of December 31, 2019 is not required and as such is not included in the table.

(7)

The equivalent per share data for Ouster is calculated by multiplying the combined pro forma per share data by the Exchange Ratio of 0.699. The weighted average shares outstanding is calculated by multiplying the Exchange Ratio of 0.699 by the sum of: (i) outstanding Ouster redeemable convertible preferred stock shares, (ii) Ouster redeemable convertible preferred stock shares issuable upon net share settlement of Ouster warrants, which will be converted into shares of Ouster common stock immediately prior to the Transaction and (iii) weighted average shares outstanding of Ouster common stock for the nine months ended September 30, 2020 and year ended December 31, 2019.



 

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MARKET PRICE AND DIVIDEND INFORMATION

CLA units, Class A ordinary shares and public warrants are currently listed on the NYSE under the symbols “CLA.U” and “CLA” and “CLA WS,” respectively.

The most recent closing price of the units, common stock and redeemable warrants as of December 21, 2020, the last trading day before announcement of the execution of the Merger Agreement, was $10.58, $10.08 and $1.12, respectively. As of February 8, 2021, the record date for the extraordinary general meeting, the closing price for each unit, common stock and redeemable warrant was $15.69, $14.02 and $3.25, respectively.

Holders of the units, public shares and public warrants should obtain current market quotations for their securities. The market price of CLA’s securities could vary at any time before the Business Combination.

Holders

As of the date of this proxy statement/prospectus there was one holder of record of CLA’s Class A ordinary shares, three holders of record of CLA’s Class B ordinary shares, one holder of record of CLA units and two holders of CLA warrants. See “Beneficial Ownership of Securities.”

Dividend Policy

CLA has not paid any cash dividends on its Class A ordinary shares to date and does not intend to pay cash dividends prior to the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon the revenues and earnings, if any, capital requirements and general financial condition of Ouster PubCo subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of Ouster PubCo’s board of directors. CLA’s board of directors is not currently contemplating and does not anticipate declaring share dividends nor is it currently expected that Ouster PubCo’s board of directors will declare any dividends in the foreseeable future. Further, the ability of Ouster PubCo to declare dividends may be limited by the terms of financing or other agreements entered into by Ouster PubCo or its subsidiaries from time to time.

Price Range of Ouster’s Securities

Historical market price information regarding Ouster is not provided because there is no public market for Ouster’s securities. For information regarding Ouster’s liquidity and capital resources, see “Ouster’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.



 

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RISK FACTOR SUMMARY

CLA believes it is important to communicate its expectations to its securityholders. However, there may be events in the future that neither CLA nor Ouster are able to predict accurately or over which they have control. The section in this proxy statement/prospectus entitled “Risk Factors” and the other cautionary language discussed in this proxy statement/prospectus provide examples of certain risks, uncertainties and events that may cause actual results to differ materially from the expectations described by CLA or Ouster in such forward-looking statements. Set forth below is only a summary of certain principal risks associated with an investment in our securities. You should consider carefully the following discussion of risks, as well as the discussion of risks included elsewhere in this proxy statement/prospectus, including those described under the section entitled “Risk Factors.

 

   

Ouster’s limited operating history makes it difficult to evaluate Ouster’s future prospects and the risks and challenges Ouster may encounter.

 

   

Ouster has incurred significant losses to date and may never achieve or sustain profitability.

 

   

If Ouster is unable to overcome its limited sales history and establish and maintain confidence in its long-term business prospects among customers in its target markets or is subject to negative publicity, then Ouster’s financial condition, operating results, business prospects and access to capital may suffer materially.

 

   

Ouster currently targets many customers that are large corporations with substantial negotiating power and exacting product standards. If Ouster is unable to sell its products to these customers, Ouster’s prospects and results of operations will be adversely affected.

 

   

Ouster’s operating results may fluctuate significantly, which makes its future operating results difficult to predict and could cause its operating results to fall below expectations or any guidance Ouster may provide and could cause the stock price of Ouster PubCo to fluctuate or decline.

 

   

Ouster is subject to the risks of cancellation or postponement of its contracts with customers or unsuccessful implementation.

 

   

Market adoption of lidar remains uncertain, and it is difficult to forecast long-term end-customer adoption rates and demand for our products.

 

   

Ouster competes against established market participants that have substantially greater resources than Ouster and against known and unknown market entrants who may disrupt Ouster’s target markets.

 

   

If Ouster’s products are not selected for inclusion in its target markets, Ouster’s business will be materially and adversely affected.

 

   

Ouster may need to raise additional capital in the future in order to execute its business plan following the Business Combination and related transactions, which may not be available on terms acceptable to Ouster, or at all.

 

   

Ouster may not be able to adequately protect or enforce its intellectual property rights or prevent competitors or other unauthorized parties from copying or reverse engineering its technology.

 

   

Ouster’s products are frequently used in applications that are subject to evolving regulations and standards.

 

   

Since the Sponsor and CLA’s directors and officers have interests that are different, or in addition to (and which may conflict with), the interests of CLA’s shareholders, a conflict of interest may have existed in determining whether the Business Combination with Ouster is appropriate as our initial business combination. Such interests include that Sponsor will lose its entire investment in us if CLA does not complete an initial business combination.

 

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The public shareholders will experience immediate dilution as a consequence of the issuance of Ouster PubCo common stock as consideration in the Business Combination and the PIPE Investment and due to future issuances pursuant to the 2021 Plan. Having a minority share position may reduce the influence that CLA’s current shareholders have on the management of Ouster PubCo.

 

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RISK FACTORS

Shareholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, including the financial statements and notes to the financial statements included herein, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement/prospectus. Certain of the following risk factors apply to the business and operations of Ouster and will also apply to the business and operations of Ouster PubCo following the completion of the Business Combination. If any of the following risks actually occurs, it may have a material adverse effect on the business, results of operations or financial condition of Ouster or Ouster PubCo and could adversely affect the trading price of its common stock following the business combination. The risks described in this “Risk Factors’’ section may also be incorrect or may change. If the risks and uncertainties that Ouster or Ouster PubCo plan for are incorrect or incomplete, or if Ouster or Ouster PubCo fail to fully understand and manage these risks successfully this failure may have a material adverse effect on the business, financial condition and results of operation of Ouster PubCo following the Business Combination. The following risks should be read in conjunction with the financial statements and notes to the financial statements included herein.

Unless the context requires otherwise, references to “Ouster,” “we,” “us,” “our” and “the company” in this section are to the business and operations of Ouster prior to the Business Combination and the business and operations of Ouster PubCo as directly or indirectly affected by Ouster by virtue of Ouster PubCo’s ownership of the business of Ouster following the Business Combination.

Risks Related to Our Business and Industry

Our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter.

Our company has a limited operating history, having been incorporated in 2015. Our limited operating history makes it difficult for us to evaluate our future prospects. Certain factors that could alone or in combination prevent us from successfully commercializing our products include:

 

   

our reliance on third parties to supply significant parts of our production process or to manufacture our products;

 

   

our ability to establish and maintain successful relationships with our suppliers or manufacturers;

 

   

our ability to achieve commercial scale production of our products on a cost-effective basis and in a timely manner;

 

   

our ability to successfully expand our product offering;

 

   

our ability to develop and protect intellectual property;

 

   

our ability to gain market acceptance of our products with customers and maintain and expand customer relationships;

 

   

the adaptability of our products and the ability of our customers to integrate our products into their products in a timely and effective manner;

 

   

the actions of direct and indirect competitors that may seek to enter the markets in which we expect to compete or that may seek to impose barriers to one or more markets that we intend to target;

 

   

the long-lead time for development of market opportunities, for which we are only at an early stage of development;

 

   

our ability to forecast our revenue and budget for, and manage, our expenses;

 

   

our ability to comply with existing and new or modified laws and regulations applicable to our business, or laws and regulations applicable to our customers for applications in which they may use our products;

 

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our ability to plan for and manage capital expenditures for our current and future products, and manage our supply chain and supplier relationships related to these current and future products;

 

   

our ability to anticipate and respond to macroeconomic changes and changes in the markets in which we operate and expect to operate;

 

   

our ability to maintain and enhance the value of our reputation and brand;

 

   

our ability to effectively manage our growth and business operations, including the impacts of the COVID-19 pandemic on our business; and

 

   

our ability to recruit and retain talented people at all levels of our organization.

If we fail to understand fully or adequately address the challenges that we are currently encountering or that we may encounter in the future, including those challenges described here and elsewhere in this “Risk Factors” section, our business, financial condition and results of operations could be adversely affected. If the risks and uncertainties that we plan for when operating our business are incorrect or change, or if we fail to manage these risks successfully, our results of operations could differ materially from our expectations and our business, financial condition and results of operations could be adversely affected.

We have incurred significant losses to date and may never achieve or sustain profitability.

We have experienced net losses in each year since our inception. In the years ended December 31, 2019 and 2018, we incurred net losses of $51.7 million and $32.8 million, respectively, and in the nine months ended September 30, 2020, we incurred net losses of $49.6 million. We expect these losses to continue for at least the next several years as we expand our product offering and continue to scale our commercial operations and research and development program. As of September 30, 2020, we had an accumulated deficit of $152.2 million. Even if we are able to increase sales of our products, there can be no assurance that we will be commercially successful.

We expect we will continue to incur significant losses for the foreseeable future as we:

 

   

continue to hire additional personnel and make investments in research and development (“R&D”) in order to develop technology and related software;

 

   

increase our sales and marketing functions, including expansion of our customer support and distribution capabilities;

 

   

hire additional personnel to support compliance requirements in connection with being a public company; and

 

   

expand operations and manufacturing.

If our products do not achieve sufficient market acceptance, we will not become profitable. If we fail to become profitable, or if we are unable to fund our continuing losses we may be unable to continue our business operations. There can be no assurance that we will ever achieve or sustain profitability.

If we are unable to overcome our limited sales history and establish and maintain confidence in our long-term business prospects among customers in our target markets or we are subject to negative publicity, then our financial condition, operating results, business prospects and access to capital may suffer materially.

Our company has a limited sales history, as we only commenced selling our first revenue grade products in late 2018. Because of our limited sales history, we have limited experience managing and growing our relationships with existing customers and securing new customers in our target industries.

Our relationships with many of our existing customers are limited as they may not be prepared to select the company as a long-term supplier given our limited operating and sales history. To establish preliminary

 

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relationships with certain customers and to build their confidence, we have entered, and may continue to enter, into evaluation agreements, spot buy purchase orders, non-binding letters of intent, and strategic customer agreements. These agreements are largely non-binding, do not include any minimum obligation to purchase any quantities of any products at this time, and do not require that the parties enter into a subsequent definitive, long-term, binding agreements; however, these preliminary agreements assist the company in building confidence with customers if we are able to effectively perform and otherwise maintain positive relationships with them. If we are unable to build confidence with our existing customers, either through these preliminary agreements (due to any failure to enter into or perform under the agreements) or otherwise, we may never secure binding purchase commitments that would allow us to produce accurate forecasts and become profitable.

With respect to new customers, they may be less confident in us and less likely to purchase our products because of a lack of awareness about our products. They may also not be convinced that our business will succeed because of the absence of an established sales, service, support, and operating history. To address this, we must, among other activities, grow and improve our marketing capability and brand awareness, which may be costly. These activities may not be effective or could delay our ability to capitalize on the opportunities that we believe are suitable to our technology and products and may prevent us from successfully commercializing our products.

To build and maintain our business, we must maintain confidence in our products, long-term financial viability and business prospects. Failure to establish and maintain customer confidence may also adversely affect our reputation and business among our suppliers, analysts, ratings agencies and other interested parties.

We currently target many customers that are large corporations with substantial negotiating power and exacting product standards. If we are unable to sell our products to these customers, our prospects and results of operations will be adversely affected.

Many of our current and potential customers are large corporations that often possess significant leverage over their suppliers, and can successfully demand contract terms favorable to themselves, such as reserving the right to terminate their supply contracts for convenience. This disparate power has required, and may require in the future, that we accept less favorable contract terms. These large corporations also have exacting technical specifications and requirements that we have been unable to, and may continue to be unable to, meet, thereby precluding our ability to secure sales. Meeting the technical requirements to secure and maintain significant contracts with any of these companies will require a substantial investment of our time and resources, and if we fail to comply with our customers’ technical specifications and standards, we may lose existing and future business. Even when we succeed in securing contracts, these large companies have been and may continue to be uncertain about their technical specifications for our products and terminate our agreement or make a later determination that our products are not satisfactory. We therefore have no assurance that we can establish relationships with these companies, that our products will meet the needs of these or other companies, or that a contract with these companies will culminate in significant or any product sales. Even when we secure agreements with these companies, we may not be effective in negotiating contract terms or managing such relationships, which could adversely affect our future results of operations.

Furthermore, in some instances, these large companies may have internally developed products and solutions that are competitive to our products. These companies may have substantial research and development resources, which may allow them to acquire or develop independently, or in partnership with others, competitive technologies. Such activities may foreclose significant sales opportunities for our products.

 

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Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide and could cause the stock price of Ouster PubCo to fluctuate or decline.

Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results. Our financial results may fluctuate as a result of a variety of factors, including:

 

   

the timing of ultimate end market and customer adoption of our products and particular versions of our products;

 

   

the varying length of production cycles for our customers to integrate our products into their broader platforms;

 

   

our product mix and average selling prices;

 

   

the cost of raw materials or supplied components critical for the manufacture of our products;

 

   

the timing and cost of, and level of investment in, research and development relating to our digital lidar technology and related software;

 

   

developments involving our competitors;

 

   

changes in governmental regulations affecting us or applications in which our customers use our products;

 

   

future accounting pronouncements or changes in our accounting policies;

 

   

the impact of epidemics or pandemics, including current business disruption and related financial impact resulting from the global COVID-19 health crisis; and

 

   

general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.

Many of these factors are outside of our control and may not fully reflect the underlying performance of our business. The individual or cumulative effects of factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful.

This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or operating results fall below the expectations of analysts or investors or below any guidance we may provide, or if the guidance we provide is below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide.

We are subject to the risks of cancellation or postponement of our contracts with customers or unsuccessful implementation.

We have experienced, and may experience in the future, unexpected cancellations of major purchases of our products, which has affected and in the future may adversely affect our results of operations. Prospective customers across our target markets generally must make significant commitments of resources to test and validate our products and confirm that they can be integrated with other technologies before including them in any particular system, product or model. The development cycles of our products with new customers vary widely depending on the application, market, customer and the complexity of the product. In our target markets, development cycles can be six months to seven or more years. These development cycles require us to invest our resources prior to realizing any revenue from the commercialization. Further, we are also subject to the risk that a customer may cancel or postpone implementation of its technology, as well as that it will not be able to integrate

 

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its technology successfully into a larger system with other sensing modalities. Our revenue growth may be impaired if the system, product or vehicle model that includes our digital lidar sensors is unsuccessful, including for reasons unrelated to our technology. Long development cycles and product cancellations or postponements may adversely affect our business, results of operations and financial condition.

Market adoption of lidar remains uncertain, and it is difficult to forecast long-term end-customer adoption rates and demand for our products.

Substantially all of our revenue is generated by the sale of our digital lidar sensors. Given the evolving nature of the markets in which we operate, it is difficult to predict the customer demand or adoption rates for lidar technology generally or our products specifically. If demand does not develop or if we cannot accurately forecast customer demand, our future financial results, business, results of operations and financial condition will be adversely affected. If prospective customers have a negative perception of, or experience with, lidar or a competitor’s lidar products they may be reluctant to adopt lidar in general or specifically our products. Any negative publicity, regardless of its accuracy, could materially adversely affect our business.

Additionally, existing non-lidar technologies may emerge as customers’ preferred alternative to lidar and may adversely affect adoption of our lidar solutions and of lidar generally. Significant developments in alternative technologies, such as cameras and radar, may materially and adversely affect our business, prospects, financial condition and operating results in ways we do not currently anticipate. Any failure by us or the lidar market generally to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could adversely affect adoption of lidar and sales of our current products or materially delay development and introduction of new and enhanced products, which could result in the loss of competitiveness of our products, decreased revenue and a loss of market share to competitors.

We are pursuing opportunities in markets that involve novel applications that are rapidly evolving, and that include both technological and regulatory uncertainties, making it difficult to predict the size and timing of market opportunities. For example, autonomous driving and lidar-based advanced driver assistance systems (“ADAS”) applications require complex technology and rigorous safety controls. Because these automotive systems are both themselves complex, and also depend on complex technologies from many suppliers, commercialization of autonomous driving or ADAS products could be delayed or impaired on account of technological capabilities that are not sufficiently advanced for deployment in vehicles. These standards may never be met at all. Additionally, ADAS has yet to, and may never, achieve widespread adoption, which would reduce demand for lidar in that market. These same concerns are also applicable to the robotics, industrial and smart infrastructure markets that we are targeting for use of our products.

Although we currently have contracts with numerous commercial customers across diverse markets, these customers may not be able to utilize our technology in the foreseeable future, or at all. Regulatory, safety or reliability developments, many of which are outside of our control, could also cause delays or otherwise impair commercial adoption of these new technologies, which will adversely affect our growth. Our future financial performance will depend on our ability to make timely investments in the correct market opportunities in this environment.

Many of our customers are still in the testing and development phases of applications with our products and it cannot be certain that they will commercialize products or systems with our digital lidar sensors or at all. We believe adoption of lidar products, including our digital lidar sensors, will depend on numerous factors, including: whether the technological capabilities of lidar and lidar-based products meet users’ current or anticipated needs; whether the benefits of designing lidar into larger sensing systems outweigh the costs, complexity and time needed to deploy such technology or replace or modify existing systems that may have used other modalities such as cameras and radar; whether users in other applications can move beyond the testing and development phases and proceed to commercializing systems supported by lidar technology and whether lidar developers can keep pace with rapid technological change in certain developing markets. If lidar technology

 

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generally does not achieve commercial success or if the market develops at a pace slower than we expect, our business, results of operation and financial condition will be materially and adversely affected.

If we are not able to effectively grow our global sales and marketing organization, or maintain or grow an effective network of distributors, software value add resellers, and integrators, our business prospects, results of operations and financial condition could be adversely affected.

In order to generate future sales growth, we will need to expand the size and geographic coverage of our field organization, including marketing, direct sales, customer support and technical services. Accordingly, our future success will depend largely on our ability to train, retain and motivate skilled regional sales managers and direct sales representatives with significant technical knowledge and understanding of our products. Because of the competition for their skill set, we may not be able to attract or retain such personnel on reasonable terms, if at all. If we are unable to grow our global sales and marketing organization, we may not be able to increase our revenue, which would adversely affect our business, financial condition and results of operations.

Additionally, we rely on a network of independent distributors to help generate sales of our products internationally. If a dispute arises with a distributor or if we terminate our relationship with a distributor or a distributor goes out of business, it may take time to identify an alternative distributor, to train new personnel to market our products, and our ability to sell those products in a region formerly serviced by a terminated distributor could be harmed. In addition, our distributors may not successfully market and sell our products and may not devote sufficient time and resources that we believe are necessary to enable our products to develop, achieve or sustain market acceptance. Any of these factors could reduce our revenue or impair our revenue growth in affected markets, increase our costs in those markets or damage our reputation. In addition, if an independent distributor were to depart and be retained by one of our competitors, we may be unable to prevent that distributor from soliciting business from our existing customers, which could further adversely affect us. As a result of our reliance on third-party distributors, we may be subject to disruptions and increased costs due to factors beyond our control, including labor strikes, third-party errors and other issues. If the services of any of these third-party distributors become unsatisfactory, we may experience delays in meeting our customers’ demands and we may be unable to find a suitable replacement on a timely basis or on commercially reasonable terms. Any failure to deliver products in a timely manner may damage our reputation and could cause us to lose potential customers.

We expect to incur substantial R&D costs and devote significant resources to developing and commercializing new products, which could significantly affect our ability to become profitable and may never result in revenue to us. Any delay or interruption of the development and commercialization of new products may adversely affect our existing business.

Our future growth depends on penetrating new markets, adapting existing products to new applications and customer requirements, and introducing new and effective products on a timely basis that then achieve market acceptance. To remain competitive, we are developing a suite of new products, including our ES2 solid state lidar sensor and a software solution that is complementary to our existing and future hardware. In connection with the development of the ES2 solid state lidar sensor, complementary software, and other R&D for new products and product enhancements to be performed by the company, we plan to incur substantial, and potentially increasing, R&D costs. Our R&D expenses were $23.3 million, $20.3 million and $19.0 million during the years ended December 31, 2019 and December 31, 2018, and the nine months ended September 30, 2020, respectively, and are likely to grow in the future. Because we account for R&D as an operating expense, these expenditures will adversely affect our results of operations in the future.

Further, our R&D program may be delayed and may not produce timely results. If we cannot produce successful results in time to accommodate customers’ or potential customers’ development timelines, we may lose business. If we are unsuccessful in introducing these products in accordance with our product launch plans or any publicly announced launch dates—including, by way of example, a failure to meet previously publicly

 

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announced product launch dates for the ES2 solid state lidar sensor—it may be injurious to our reputation and brand and adversely affect our ability to be competitive in our target and new markets.

We expect to rely on products we are currently developing, such as our ES2 solid state lidar and our software solutions, for a significant portion of our future growth; however, even if our R&D efforts are successful and completed on time, there is no guarantee that we will be successful in adapting our business to our new products or that our new products will achieve market acceptance or generate sufficient revenue to make us profitable. Our future products, such as any software solutions we develop, may be products we have limited or no experience commercializing. In launching such products, we may face foreseen and unforeseen difficulties that adversely affect such the commercialization and could have a material adverse affect on our operations and business. Additionally, the success of our competitors’ R&D efforts, including producing higher performing products or providing products competitive to our new products to our customers before us, may result in loss of business to us.

The promise of new products and successful R&D may even decrease our expected and actual revenue attributable to existing products, as historically, customers have delayed or cancelled outstanding purchasing commitments for current generation products in anticipation of the release of new generation products from the company. There is no guarantee that these delays and cancellations will not occur again in the future as we develop, announce and commercialize new products like our ES2 solid state lidar sensor or our complementary software solutions.

We compete against established market participants that have substantially greater resources than us and against known and unknown market entrants who may disrupt our target markets.

Our target markets are highly competitive, and both lower and higher performing lidar products are becoming less expensive, including competitors’ products. We may not be able to compete effectively in the market against these competitors. Our future success will depend on our ability to emerge as and sustain our position as a leader in target and new markets by continuing to effectively compete with existing and new competitors. Our competitors are numerous and they compete with us directly by offering lidar products and indirectly by attempting to solve some of the same challenges with different technology. Established competitors in the market for lidar sensors have significantly greater resources and more experience than we do. These competitors have commercialized lidar technology that has achieved market adoption, strong brand recognition and may continue to improve in both anticipated and unanticipated ways. They may also have entered into commercial relationships with key customers and have built relationships and dependencies between themselves and those key customers that we may need to disrupt if we are to be commercially viable.

In addition to the established market competitors, new competitors may be preparing to enter or are entering the lidar market that may disrupt the commercial landscape of target markets in ways that we may not be able to prepare for—including customers of lidar who may be developing their own competitive solutions. We do not know how close any of our current and potential competitors are to commercializing their lidar products and services, nor what they intend to develop as part of their product roadmaps. The already competitive landscape of the lidar market, along with both foreseeable and unforeseeable entries of competitors and lidar technology from those competitors in our target markets, may result in pricing pressure, reduced margins and may impede our ability to increase the sales of our products or cause us to lose market share, any of which will adversely affect our business, results of operations and financial condition.

If our products are not selected for inclusion in our target markets, our business will be materially and adversely affected.

Although our products are designed for use in any market, each of our target or new markets may have unique barriers to entry. If we are unsuccessful in overcoming these barriers, it may affect our entrance into these target or new markets which could adversely affect our future results of operations.

 

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Our products are used in a wide variety of existing and emerging use cases in the industrial market, where our target customers are generally engaged in the manufacturing, operation, or after-market modification of heavy industrial machinery. These tend to be large companies that move slowly to larger scale production, often with years-long timelines. If our products are not chosen for deployment in these projects, or we lose a program under any circumstances, we may not have an opportunity to obtain that business again for many years. Industrial automation is a demanding industry with product specifications that our products may not always meet.

Our products also are used in a wide variety of existing and emerging use cases in the smart infrastructure market, which generally consists of public bodies and private commercial businesses engaging in the monitoring and analysis of pedestrian and vehicle movements for the purpose of providing building security, improving road user safety, and increasing roadway efficiency. This is a nascent market, and while this industry is experimenting with the use of lidar in these applications, our customers may decide that lidar is not a feasible solution for one of a variety of reasons, including current price points of lidar sensors. Customers in this market are often local governments, such as city governments, which may be subject to political pressures, and may not control their own budgets. For example, programs could be cancelled due to legislative action that is out of a local government’s control.

Our products also are used in a wide variety of existing and emerging use cases in the robotics market, in which our customers are generally engaged in the design, production, operation, or after-market modification of small mobile human-less vehicles. This is a competitive market that often has strict functional and pricing requirements for products. If we are unable to make products that meet these requirements, or sell products at the required price point, we could lose this business to competitors or competitive technologies. There are diverse and potentially conflicting requirements across the robotics industry that may force us to prioritize certain segments over others, resulting in a lower total available market. Our target markets involve risks of program delay, loss, and cancellation.

Our products also may be purchased by automotive OEMs and their suppliers in connection with their design and development of autonomous driving and ADAS technology. These programs are time and resource intensive, requiring thousands of man hours and several years. Automotive OEMs and suppliers undertake extensive testing or qualification processes prior to placing orders for large quantities of products such as ours, because such products will function as part of a larger system or platform and must meet certain other specifications. We spend significant time and resources to pursue the business of having our products selected by automotive OEMs and their suppliers for use in the manufacture of a particular vehicle model. Because we do not have long-term, binding relationships with Tier 1 automotive suppliers, automotive OEMs may be less inclined to select our products for use in their vehicle models. If we are not chosen to supply products for a particular vehicle model, we may not have an opportunity to supply our products to that automotive OEM for that vehicle model for a period of many years, perhaps as long as five to seven or more years. If our products are not selected by an automotive OEM or its suppliers for one vehicle model or if our products are not successful in that vehicle model, it is less likely that our products will be deployed in other vehicle models of that OEM. If we fail to win a significant number of vehicle models from one or more of automotive OEMs or their suppliers, our business, results of operations and financial condition may be adversely affected.

We may need to raise additional capital in the future in order to execute our business plan following the Business Combination and related transactions, which may not be available on terms acceptable to us, or at all.

We have experienced negative working capital, recurring losses from operations, and negative cash flows at operations, and we expect to continue operating at a loss for the foreseeable future. As of September 30, 2020, our cash and cash equivalents were $18.4 million, and as a result, at the time of issuance of our interim financial statements for the nine months ended September 30, 2020, we concluded that there was substantial doubt about our ability to continue as a going concern for a period of twelve months. We believe our cash and cash equivalents on hand and cash we expect to obtain from the Business Combination and the PIPE Investment,

 

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together with cash we expect to generate from future operations, will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of this proxy statement/prospectus. However, in the future we may still require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and we may determine to engage in equity or debt financings or enter into credit facilities for other reasons. In order to further business relationships with current or potential customers or partners, we may issue equity or equity-linked securities to such current or potential customers or partners. We may not be able to timely secure additional debt or equity financing on favorable terms, or at all. If we raise additional funds through the issuance of equity or convertible debt or other equity-linked securities or if it issues equity or equity-linked securities to current or potential customers to further business relationships, our existing stockholders could experience significant dilution. Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited.

The terms of our loan and security agreement with Runway Growth Credit Fund Inc. place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.

We have a $10.0 million loan and security agreement with Runway Growth Credit Fund Inc. (“Runway”) that is secured by a lien covering substantially all of our assets, including our intellectual property. As of September 30, 2020, the outstanding principal balance under the loan and security agreement was $7.0 million. The loan and security agreement contains customary covenants and events of default applicable to us. These covenants include, among others, requirements that restrict us and our subsidiaries’ ability to create, incur, assume or be liable for any indebtedness other than permitted indebtedness or engage in mergers or acquisitions. If we default under the loan and security agreement, Runway may accelerate all of our repayment obligations and take control of our pledged assets, potentially requiring us to renegotiate our agreement on terms less favorable to us or to immediately cease operations. Further, if we are liquidated, Runway’s right to repayment would be senior to the rights of the holders of our common stock to receive any proceeds from the liquidation. Runway could declare a default upon the occurrence of certain events including, among others, failure to pay amounts due under the loan and security agreement or violation of the covenants under the loan and security agreement, thereby requiring us to repay the loan immediately or to attempt to reverse the declaration of default through negotiation or litigation. Any declaration by Runway of an event of default could significantly harm our business and prospects. If we raise any additional debt financing, the terms of such additional debt could further restrict our operating and financial flexibility.

Key components in our products come from limited or single source third party suppliers, and we expect to rely on third-party to manufacture a significant portion of our products for the foreseeable future. Interruptions in our relationship with these third parties could adversely impact our business.

We rely on third parties to supply key components of our digital lidar sensors and to manufacture a significant portion of our digital liar sensors. In particular, as of December 31, 2020, approximately 60% of our manufacturing output was being provided through our relationship with Benchmark Electronics, Inc. (“Benchmark”), a percentage which we expect will significantly increase by 2022. We have also outsourced much of our transportation and logistics management. These arrangements are intended to lower our operating costs, but they also reduce our direct control over production and distribution. This diminished control may have an adverse effect on the quality or quantity of products or services, or our flexibility to respond to changing conditions. If Benchmark or any of our third-party component suppliers or logistics and transportation partners experience interruptions, delays or disruptions in supplying their products or services, including by natural disasters, the global COVID-19 pandemic, other health epidemics and outbreaks, or work stoppages or capacity

 

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constraints, our ability to ship products to distributors and customers may be delayed. In addition, unfavorable economic conditions could result in financial distress among third-party suppliers or manufacturers upon which we rely, thereby increasing the risk of disruption of supplies necessary to fulfill our production requirements and meet customer demands. Additionally, if any of these third parties on whom we rely were to experience quality control problems in their operations and our products do not meet customer or regulatory requirements, we could be required to cover the cost of repair or replacement of any defective products. These delays or product quality issues could have an immediate and material adverse effect on our ability to fulfill orders and could have a negative effect on our operating results. In addition, such delays or issues with product quality could adversely affect our reputation and our relationship with our customers, distributors, value added software resellers, and integrators.

If these third parties experience financial, operational, manufacturing capacity or other difficulties, or experience shortages in required components, or if they are otherwise unable or unwilling to continue to manufacture our products in required volumes or at all, our supply may be disrupted, we may be required to seek alternate manufacturers and we may be required to re-design our products. It would be time-consuming, and could be costly and impracticable, to begin to use new manufacturers, components or designs, and such changes could cause significant interruptions in supply and could have an adverse effect on our ability to meet our scheduled product deliveries and may subsequently lead to the loss of sales. While we take measures to protect our trade secrets, the use of third-party suppliers and manufacturers may also risk disclosure of our innovative and proprietary manufacturing methodologies, which could adversely affect our business.

We believe there are a limited number of competent, high-quality suppliers in the industry that meet our strict quality and control standards, and as we seek to obtain additional or alternative supplier arrangements in the future, there can be no assurance that we would be able to do so on satisfactory terms, in a timely manner, or at all. Our suppliers could also discontinue or modify components used in our products. In some cases, the lead times associated with certain components are lengthy and preclude rapid changes in quantities and delivery schedules. We may in the future experience component shortages and price fluctuations of certain key components and materials, and the predictability of the availability and pricing of these components may be limited. Component shortages or pricing fluctuations could be material in the future. In the event of a component shortage, supply interruption or material pricing change from suppliers of these components, we may not be able to develop alternate sources in a timely manner or at all in the case of sole or limited sources. Developing alternate sources of supply for these components may be time-consuming, difficult, and costly and we may not be able to source these components on terms that are acceptable to us, or at all, which may undermine our ability to meet our requirements or to fill customer orders in a timely manner. Any interruption or delay in the supply of any of these parts or components, or the inability to obtain these parts or components from alternate sources at acceptable prices and within a reasonable amount of time, would adversely affect our ability to meet our scheduled product deliveries to our customers. This could adversely affect our relationships with customers and distributors and could cause delays in shipment of our products and adversely affect our operating results. In addition, increased component costs could result in lower gross margins. Even where we are able to pass increased component costs along to our customers, there may be a lapse of time before it is possible to do so, such that we must absorb the increased cost. If we are unable to buy these components in quantities sufficient to meet our requirements on a timely basis, we will not be able to deliver products to our customers, which may result in such customers using competitive products instead of ours.

An interruption in, or the loss of operations at, one or more of our suppliers’ facilities or at Benchmark’s facility, which may be caused by work stoppages, disease outbreaks or pandemics, acts of war, terrorism, fire, earthquakes, flooding or other natural disasters at one or more of these facilities, could delay, postpone or reduce production of some of our products, which could have a material adverse effect on our business, results of operations and financial condition until such time as such interruption is resolved or an alternate source of production is secured.

 

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Our plan to outsource a substantial percentage of our manufacturing outside of the United States involves certain risks or may not be successful, which could harm our ability to deliver products and recognize revenue.

Historically, we have manufactured all of our digital sensors at our facility in San Francisco, California. We intend to maintain approximately 10% to 20% of our manufacturing at this facility; however, in the last eighteen months, we began moving a portion of our manufacturing operations to a manufacturing facility in Thailand in connection with our relationship with Benchmark, which as of December 31, 2020, accounted for approximately 60% of our manufacturing output. We expect this facility to ramp to full production in the first quarter of 2021 and to be responsible for approximately 90% of our manufacturing requirements by 2022. Any substantial delay in bringing this facility up to full production on our current schedule may hinder our ability to produce all of the products needed to meet orders and/or achieve our expected financial performance. Opening this facility has required, and will continue to require, additional capital expenditures and the efforts and attention of our management and other personnel, which has and will continue to divert resources from our existing business or operations. If and when this manufacturing facility is brought up to full production according to our current schedule, it may not provide us with all of the operational and financial benefits we expect to receive.

We have invested in manufacturing process equipment which is held at Benchmark’s facility, and we may make prepayments to some of our suppliers associated with long-term supply agreements. While these arrangements help ensure the supply of components and finished goods, if our co-manufacturer or suppliers experience severe financial problems or other disruptions in their business, such continued supply would be reduced or terminated, and the recoverability of manufacturing process equipment or prepayments would be negatively impacted.

Additionally, manufacturing outside the United States is subject to several inherent risks, including:

 

   

foreign currency fluctuations;

 

   

local economic conditions;

 

   

political instability;

 

   

import or export requirements;

 

   

foreign government regulatory requirements;

 

   

reduced protection for intellectual property rights in some countries;

 

   

tariffs and other trade barriers and restrictions; and

 

   

potentially adverse tax consequences.

We are exposed to the risk of write-downs on the value of our inventory and other assets, in addition to purchase commitment cancellation risk.

We record a write-down for product and component inventories that have become obsolete or exceed anticipated demand, or for which cost exceeds net realizable value. We also accrue necessary cancellation fee reserves for orders of excess products and components. We review long-lived assets, including capital assets held at our suppliers’ facilities, for impairment whenever events or circumstances indicate the assets may not be recoverable. If we determine that an impairment has occurred, we record a write-down equal to the amount by which the carrying value of the asset exceeds its fair value. Although we believe our inventory, capital assets, and other assets and purchase commitments are currently recoverable, no assurance can be given that we will not incur write-downs, fees, impairments and other charges given the rapid and unpredictable pace of product obsolescence in the industries in which we compete.

We order components for our products and build inventory in advance of product manufacturing and shipments. Manufacturing purchase obligations cover our forecasted component and manufacturing

 

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requirements, typically for periods up to three months. Because our target markets are volatile, competitive and subject to rapid technology and price changes, and because we have limited sales history, there is a risk we will forecast incorrectly and order or produce excess or insufficient amounts of components or products, or not fully utilize firm our purchase commitments.

Our forecasts of market growth may not be accurate.

Market opportunity estimates and growth forecasts included in this proxy statement/prospectus are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The forecasts and estimates in this proxy statement/prospectus relating to the expected size and growth of the markets for lidar-based technology may prove to be inaccurate. Even if these markets experience the forecasted growth described in this proxy statement/prospectus, we may not grow our business at similar rates, or at all. Our future growth is subject to many factors, including market adoption of our products, which is subject to many risks and uncertainties. Accordingly, the forecasts and estimates of market size and growth described in this proxy statement/prospectus, should not be taken as indicative of our future growth. In addition, these forecasts do not take into account the impact of the current global COVID-19 pandemic, and we have no assurances that these forecasts will not be materially and adversely affected as a result.

We may experience difficulties in managing our growth and expanding our operations.

We expect to experience significant growth in the scope and nature of our operations. Our ability to manage our operations and future growth will require us to continue to improve our operational, financial and management controls, compliance programs and reporting systems. We are currently in the process of strengthening our compliance programs, including our compliance programs related to product certifications, quality management systems certifications, environmental certifications, export controls, privacy and cybersecurity and anti-corruption. We may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems and procedures, which could have an adverse effect on our business, reputation and financial results. Additionally, rapid growth in our business may place a strain on our human and capital resources. Furthermore, we expect to continue to conduct our business internationally and anticipate increased business operations in the United States, Europe, Asia and elsewhere. These diversified, global operations place increased demands on our limited resources and require us to substantially expand the capabilities of our administrative and operational resources and to attract, train, manage and retain qualified management, technical, manufacturing, engineering, sales and other personnel. As our operations expand domestically and internationally, we will need to continue to manage multiple locations and additional relationships with various customers, partners, suppliers and other third parties across several markets.

We are focusing our current commercial efforts across four distinct target markets. We will be required to prioritize our limited financial and managerial resources as we pursue particular development and commercialization efforts in each target market. Any resources we expend on one or more of these efforts could be at the expense of other potentially profitable opportunities.

We do not currently have long-term, committed supply contracts with many of our suppliers. Loss of one or more of these suppliers or our inability to identify and establish relationships with new suppliers could harm our business and impede our growth.

Because of the absence of long-term supply contracts, any of these suppliers could seek to alter or terminate its relationship with us at any time, leaving us with periods during which we have limited or no ability to manufacture our products. The production of our products is dependent on producing or sourcing certain key components and raw materials at acceptable price levels. If we are unable to adequately reduce and control the costs of such key components, we will be unable to realize manufacturing costs targets, which could reduce the market adoption of our products, damage our reputation with current or prospective customers, and materially and adversely impact our brand, business, prospects, financial condition and operating results.

 

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If we do not maintain sufficient inventory or if we do not adequately manage our inventory, we could lose sales or incur higher inventory-related expenses, which could negatively affect our operating results.

To ensure adequate inventory supply, we forecast inventory needs and expenses, place orders sufficiently in advance with our suppliers and manufacturing partner and manufacture products based on our estimates of future demand for particular products. Fluctuations in the adoption of lidar products may affect our ability to forecast our future operating results, including revenue, gross margins, cash flows and profitability. Our ability to accurately forecast demand for our products could be affected by many factors, including the rapidly changing nature of our current target markets, the uncertainty surrounding the market acceptance and commercialization of lidar technology, the emergence of new markets, an increase or decrease in customer demand for our products or for products and services of our competitors, product introductions by competitors, the COVID-19 pandemic, other health epidemics and outbreaks, and any associated work stoppages or interruptions, unanticipated changes in general market conditions and the weakening of economic conditions or consumer confidence in future economic conditions. We may face challenges acquiring adequate supplies to manufacture our products and we and Benchmark may not be able to manufacture our products at a rate necessary to satisfy the levels of demand, which would negatively affect our short-term and long-term growth. This risk may be exacerbated by the fact that we may not carry or be able to obtain for our suppliers a significant amount of inventory to satisfy short-term demand increases. If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products available for sale.

Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would adversely affect our financial results, including our gross margin, and have a negative effect on our brand. Conversely, if we underestimate customer demand for our products, we may not be able to deliver products to meet our requirements, and this could result in damage to our brand and customer relationships and adversely affect our revenue and operating results.

Our business could be materially and adversely affected if our customers become unable to, or otherwise do not, pay their invoices.

If one or more of our major customers would be unable to pay our invoices as they become due or a customer simply refuses to make such payments if it experiences financial difficulties, our business would be adversely affected. If a major customer were to enter into bankruptcy proceedings or similar proceedings whereby contractual commitments are subject to stay of execution and the possibility of legal or other modification, we could be forced to record a substantial loss. Additionally, a number of our customers are early stage, startup companies that are privately funded, have limited resources, and do not have a history of creditworthiness that we can audit to determine reliability. They could fail to raise enough capital and have to shut down operations. Even if they are financially solvent and stable and we are successful in securing a commercial relationship with them, their business plans for future programs may be inherently uncertain and unpredictable, and less structured than established companies.

We are exposed to credit risk on our trade accounts receivable, supplier non-trade receivables and prepayments related to long-term supply agreements, and this risk is heightened during periods when economic conditions worsen.

We sell our products directly to small and mid-sized businesses and educational customers. Our outstanding trade receivables are not covered by collateral, third-party bank support or financing arrangements, or credit insurance. Our exposure to credit and collectability risk on our trade receivables is higher in certain international markets and our ability to mitigate such risks may be limited. We also have unsecured supplier non-trade receivables resulting from purchases of components by outsourcing partners and other vendors that manufacture sub-assemblies or assemble final products for us. In addition, from time to time, we may make prepayments associated with long-term supply agreements to secure supply of inventory components. While we are implementing procedures to monitor and limit exposure to credit risk on our trade and supplier non-trade receivables, there can be no assurance such procedures will effectively limit our credit risk and avoid losses.

 

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If we engage in acquisitions to grow our business, we will incur a variety of costs and may potentially face numerous risks that could adversely affect our business and operations and cause our stock price to decline.

If appropriate opportunities become available, we may seek to acquire businesses, assets, technologies or products to enhance our business. In connection with any acquisitions, we could issue additional equity securities, which would dilute the stockholders of Ouster PubCo, incur substantial debt to fund the acquisitions or assume significant liabilities.

Acquisitions involve many and diverse risks and uncertainties, including problems integrating the purchased operations, assets, technologies or products as well as unanticipated costs, liabilities, and economic, political, legal and regulatory challenges due to our inexperience operating in new regions or countries. To date, we have limited experience with acquisitions and the integration of acquired technology and personnel. Acquisitions may divert our attention from our core business. Acquisitions may require us to record goodwill and non-amortizable intangible assets that will be subject to testing on a regular basis and potential period impairment charges, incur amortization expenses related to certain intangible assets, and incur write offs and restructuring and other related expenses, any of which could harm our operating results and financial condition.

New business strategies, especially those involving acquisitions, are inherently risky and may not be successful. Failure to successfully identify, complete, manage and integrate acquisitions could materially and adversely affect our business, financial condition and results of operations and could cause Ouster PubCo’s stock price to decline.

Our sales and operations in international markets expose us to operational, financial and regulatory risks.

International sales comprise a significant amount of our overall revenue. Sales to international customers accounted for 38%, 39 %, and 49% of our revenue for the years ended December 31, 2019 and 2018 and for the nine months ended September 30, 2020, respectively. Growing our international sales is an important part of our growth strategy, but these efforts may not be successful. International operations are subject to a number of other risks, including:

 

   

import and export laws and the impact of tariffs;

 

   

exchange rate fluctuations;

 

   

political and economic instability, international terrorism and anti-American sentiment, particularly in emerging markets;

 

   

global or regional health crises, such as the COVID-19 pandemic or other health epidemics and outbreaks;

 

   

potential for violations of anti-corruption laws and regulations, such as those related to bribery and fraud;

 

   

preference for locally branded products, and laws and business practices favoring local competition;

 

   

potential consequences of, and uncertainty related to, the “Brexit” process in the United Kingdom, which could lead to additional expense and complexity in doing business there;

 

   

increased difficulty in managing inventory;

 

   

increased risk in collecting trade receivables;

 

   

delayed revenue recognition;

 

   

less effective protection of intellectual property;

 

   

stringent regulation of the autonomous or other systems or products using our products and stringent consumer protection and product compliance regulations, including but not limited to General Data

 

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Protection Regulation in the European Union, European competition law, the Restriction of Hazardous Substances Directive, the Waste Electrical and Electronic Equipment Directive and the European Ecodesign Directive that are costly to comply with and may vary from country to country;

 

   

difficulties and costs of staffing and managing foreign operations;

 

   

changes in local tax and customs duty laws or changes in the enforcement, application or interpretation of such laws; and

 

   

U.S. government’s restrictions on certain technology transfer to certain countries of concern.

The occurrence of any of these risks could negatively affect our international business and consequently our business, operating results, and financial condition.

The complexity of our products could result in unforeseen delays or expenses from undetected defects, errors or reliability issues in hardware or software which could reduce the market adoption of our new products, damage our reputation with current or prospective customers, expose us to product liability and other claims and adversely affect our operating costs.

Our products are highly technical and very complex and require high standards to manufacture and have in the past and will likely in the future experience defects, errors or reliability issues at various stages of development. We may be unable to timely release new products, manufacture existing products, correct problems that have arisen or correct such problems to our customers’ satisfaction. Additionally, undetected errors, defects or reliability issues, especially as new products are introduced or as new versions are released, could result in serious injury to the end users of technology incorporating our products, or those in the surrounding area, our customers never being able to commercialize technology incorporating our products, litigation against us, negative publicity and other consequences. These risks are particularly prevalent in the autonomous driving and ADAS markets. Some errors or defects in our products may only be discovered after they have been tested, commercialized and deployed by customers. If that is the case, we may incur significant additional development costs and product recall, repair or replacement costs. These problems may also result in claims, including class actions, against us by our customers or others. Our reputation or brand may be damaged as a result of these problems and customers may be reluctant to buy our products, which could adversely affect our ability to retain existing customers and attract new customers and could adversely affect our financial results.

In addition, we could face material legal claims for breach of contract, product liability, fraud, tort or breach of warranty as a result of these problems. Defending a lawsuit, regardless of its merit, could be costly and may divert management’s attention and adversely affect the market’s perception of us and our products. In addition, our business liability insurance coverage could prove inadequate with respect to a claim and future coverage may be unavailable on acceptable terms or at all. These product-related issues could result in claims against us and our business could be adversely affected.

Our customers use our solutions in autonomous driving and ADAS applications, which present the risk of significant injury, including fatalities. We may be subject to claims if a product using our lidar technology is involved in an accident and persons are injured or purport to be injured. Any insurance that we carry may not be sufficient or it may not apply to all situations. Similarly, our customers could be subjected to claims as a result of such accidents and bring legal claims against us to attempt to hold us liable. In addition, if lawmakers or governmental agencies were to determine that the use of our products or autonomous driving or certain ADAS applications increased the risk of injury to all or a subset of our customers, they may pass laws or adopt regulations that limit the use of our products or increase our liability associated with the use of our products or that regulate the use of or delay the deployment of autonomous driving and ADAS technology. Any of these events could adversely affect our brand, relationships with customers, operating results or financial condition.

 

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We may incur significant direct or indirect liabilities in connection with our product warranties which could adversely affect our business and operating results.

We typically offer a limited product warranty that requires our products to conform to the applicable specifications and be free from defects in materials and workmanship for a limited warranty period. As a result of increased competition and changing standards in our target markets, we may be required to increase our warranty period length and the scope of our warranty. To be competitive, we may be required to implement these increases before we are able to determine the economic impact of an increase. Accordingly, we may be at risk that any such warranty increase could result in foreseeable and unforeseeable losses for the company.

In particular, the usage of our products by target customers could make us liable for warranty claims and pecuniary and reputational damages. In our target markets, our products may be placed in physical locations and environments that present harsh operating conditions, or that present a risk of product damage due to accidents or vandalism. This may result in more product failures than we anticipate, and may require us to provide warranties for our products beyond our knowledge of their performance. This could increase the rate of customer returns and warranty claims, resulting in higher than expected operating costs for us. Product failures may also affect market acceptance of our products and our ability to win future business. Any negative publicity related to the perceived quality of our products could affect our brand image, partner and customer demand, and adversely affect our operating results and financial condition.

Our revenue and margins could be adversely affected if we fail to maintain competitive average selling prices, high sales volumes, and/or fail to reduce product costs.

Cost-cutting initiatives adopted by our customers often place increased downward pressure on our average selling prices. We also expect that any long term or high-volume agreements with customers may require step-downs in pricing over the term of the agreement or, if commercialized, over the period of production. We strive to keep our average selling price competitive and expect to achieve profitability by maintaining competitive average sales prices and through continually lower product costs. Our average selling price may be driven down by customer-specific selling price fluctuations such as non-standard discounts on large volume purchases. These lower average selling prices on large volume purchases may cause fluctuations in revenue and gross margins on a quarterly and annual basis and ultimately adversely affect our profitability. We may also experience declines in the average selling prices of our products generally as our customers seek to commercialize autonomous systems at prices low enough to achieve market acceptance and as our competitors continue to produce and commercialize lower cost competing technologies. To achieve profitability and maintain margins, we will also need to continually reduce product and manufacturing costs. Reductions in product and manufacturing costs are principally achieved by scaling our production volumes and through step changes in manufacturing and continued engineering of the most cost-effective designs for our products. In addition, we must continuously drive initiatives to reduce labor cost, improve worker efficiency, reduce the cost of materials, use fewer materials and further lower overall product costs by carefully managing component prices, inventory and shipping cost. We need to continually increase sales volume and introduce new, lower-cost products in order to maintain our overall gross margin. If we are unable to maintain competitive average selling prices, increase our sales volume or successfully introduce new, low-cost products, our revenue and overall gross margin would likely decline.

Adverse conditions in the industries we target or the global economy more generally could have adverse effects on our results of operations.

While we make our strategic planning decisions based on the assumption that the markets we are targeting will grow, our business is dependent, in large part on, and directly affected by, business cycles and other factors affecting the robotics, industrial automation, smart infrastructure, and transportation industries and global economy generally. Our target markets are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences, changes in interest rates and credit availability, consumer confidence, environmental impact, governmental incentives and regulatory requirements, political volatility, labor relations issues, trade agreements and other factors.

 

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Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

As of December 31, 2019, we had $69.5 million of U.S. federal and $70 million of state net operating loss carryforwards available to reduce future taxable income. Of the $69.5 million in U.S. federal operating loss carryforwards, $61.8 million will be carried forward indefinitely for U.S. federal tax purposes and $7.7 million will expire beginning 2035. Of our U.S. state net operating loss carryforwards, $70.0 million will expire beginning 2035. It is possible that we will not generate taxable income in time to use these net operating loss carryforwards before their expiration (or that we will not generate taxable income at all). Under legislative changes made in December 2017, U.S. federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such net operating losses is limited. It is uncertain if and to what extent various states will conform to these in federal tax laws. In addition, the federal and state net operating loss carryforwards and certain tax credits may be subject to significant limitations under Section 382 and Section 383 of the U.S. Tax Code, respectively, and similar provisions of state law. Under those sections of the U.S. Tax Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change attributes, such as research tax credits, to offset its post-change income or tax may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Ouster has not yet undertaken an analysis of whether the Business Combination constitutes an “ownership change” for purposes of Section 382 and Section 383 of the U.S. Tax Code.

Our future success depends in part on recruiting and retaining key personnel and if we fail to do so, it may be more difficult for us to execute our business strategy. We are currently a small organization and will need to hire additional qualified personnel to effectively implement our strategic plan.

Our success depends on our ability to attract, retain and motivate highly qualified management, technical, manufacturing, engineering and sales personnel. In particular, our success may depend on our ability to recruit and retain management personnel who are qualified to manage a public company. We are highly dependent on our senior management, including our founders, Angus Pacala and Mark Frichtl. If any of such persons left, our business could be harmed. All of our employees are “at will” employees. The loss of the services of one or more of our key employees could delay or have an impact on the successful commercialization of our products. We do not maintain key man insurance.

In addition, our ability to successfully execute on our strategic plan depends in part on our ability to continue to build our organization and hire qualified personnel, especially with technical, manufacturing, engineering, and sales expertise. Competition for qualified personnel is especially fierce in the San Francisco Bay Area. We may not be able to attract and retain qualified personnel on acceptable terms given the competition for such personnel. If we are unsuccessful in our recruitment efforts, it may adversely affect our business and our growth prospects.

Some of our employees are employed by professional employer organizations.

We contract with non-US professional employer organizations, or PEOs, to administer our human resources, payroll and employee benefits functions for some of our or our subsidiaries’ employees outside of the United States. Although we recruit and select these employees, their employment relationship is with the relevant PEO. Accordingly, these employees are compensated through the PEO, are governed by the work policies created by the PEO and receive their annual wage statements and other payroll-related reports from the PEO. The PEO relationship streamlines hiring and employee maintenance, and enables management to focus on issues other than payroll administration, but this relationship also exposes us to some risks. For example, if the non-US PEO fails to adequately withhold or pay employer taxes or to comply with other applicable laws, we may be held liable for such violations notwithstanding any indemnification provisions provided to us by the non-US PEOs. In certain non-US jurisdictions, despite the PEO relationship, the employee may nonetheless be deemed our direct

 

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employee, and the potential liability for any non-compliance with applicable laws increases depending on whether our company has an entity or other corporate presence in the country, among other factors set forth under applicable local laws. Court and administrative proceedings related to matters of employment tax, labor law and other laws applicable to PEO arrangements could distract management from our business and cause us to incur significant expense. If we were held liable for violations by PEOs, such monetary penalties may adversely affect our profitability and could negatively affect our business and results of operations.

Legal and Regulatory Risks Related to Our Business

Our products are frequently used in applications that are subject to evolving regulations and standards.

Our customers may use our products for regulated and standardized applications that require our products to comply with regulations and standards that are applicable to both our products and to those industries and applications, including functional safety and product reliability standards. New regulations and industry standards may be adopted that result in delays or cancellations of programs. If we decide not to pursue or fail to achieve these regulatory or industry certifications, we may lose existing or potential commercial opportunities or be exposed to legal liability from regulators.

We are subject to governmental export and import controls and economic sanctions laws and regulations. Our failure to comply with these laws and regulations could have an adverse effect on our business, prospects, financial condition and results of operations.

Our products and solutions are subject to certain U.S. and foreign export controls, trade sanctions, and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. U.S. export control laws and regulations and economic sanctions prohibit the shipment of certain products and services to countries, governments, and persons targeted by U.S. sanctions. Even though we take precautions to prevent our productions and solutions from being provided to entities subject to these restrictions, our products could find their way to such prohibited entities. Any such provision could have negative consequences, including government investigations, penalties, or reputational harm.

In addition, complying with export control and sanctions regulations for a particular sale may be time-consuming and create delays in the introduction of our products and solutions in some international markets, and, in some cases, prevent the export of our software and services to some countries altogether. Exports of our products and technology must be made in compliance with these laws and regulations. If a license is required from a government agency prior to sale, no exports may occur until the appropriate approvals are obtained. If we fail to comply with these laws and regulations, penalties could be imposed, including substantial monetary fines and/or denial of export privileges. In addition, in extreme cases responsible employees or managers can be held criminally liable for such violations.

Changes to trade policy, tariffs and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.

Any new export or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or changes in global, political, regulatory and economic condition affecting U.S. trade, manufacturing, development or investment, could result in additional restrictions on our ability to conduct business. Recently, the U.S. has instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S. and other countries where we conduct our business. A number of other nations have proposed or instituted similar measures directed at trade with the United States in response. As a result of these developments, there may be greater restrictions and economic disincentives on international trade that could adversely affect our business. As additional trade-related policies are instituted, we need to modify our business operations to comply and adapt to such developments, which may be time-consuming and expensive.

 

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We may become involved in legal and regulatory proceedings and commercial or contractual disputes, which could have a material adverse effect on our profitability and consolidated financial position.

We may be, from time to time, involved in litigation, regulatory proceedings and commercial or contractual disputes that may be significant. These matters may include, without limitation, disputes with our distributors, suppliers and customers, intellectual property claims, stockholder litigation, government investigations, class action lawsuits, personal injury claims, environmental issues, customs and value-added tax disputes and employment and tax issues. In addition, we have in the past and could face in the future a variety of labor and employment claims against us, which could include but is not limited to general discrimination, wage and hour, privacy, ERISA or disability claims. In such matters, government agencies or private parties may seek to recover from us large, indeterminate amounts in penalties or monetary damages (including, in some cases, treble or punitive damages) or seek to limit our operations in some way. These types of lawsuits could require significant management time and attention or could involve substantial legal liability, adverse regulatory outcomes, or substantial expenses to defend. Often these cases raise complex factual and legal issues and create risks and uncertainties. No assurances can be given that any proceedings and claims will not have a material adverse impact on our operating results and consolidated financial position or that our available insurance will mitigate this impact.

We are subject to, and must remain in compliance with, numerous laws and governmental regulations concerning the manufacturing, use, distribution and sale of our products. Some of our customers also require that we comply with their own unique requirements relating to these matters.

We manufacture and sell products that contain components, which may contain materials that are subject to government regulation in both the locations where we manufacture and assemble our products, as well as the locations where we sell our products. Since we operate on a global basis, this is a complex process which requires continual monitoring of regulations and an ongoing compliance process to ensure that we and our suppliers are in compliance with existing regulations in each market where we operate. If there is an unanticipated new regulation that significantly impacts our use and sourcing of various components or requires more expensive components, that regulation could materially adversely affect our business, results of operations and financial condition. If we are not currently in compliance with existing regulations, or we fail to adhere to new regulations or fail to continually monitor the updates, we may incur costs in remedying our non-compliance and it may disrupt our operations. In such circumstances, we may also be subject to litigation, lose customers, suffer negative publicity and our business, results of operations, and financial condition could be adversely affected.

We and our vendors are subject to various environmental laws and regulations that could impose substantial costs upon us and cause delays in expanding production facilities.

Environmental pollution and climate change have been the subject of significant legislative and regulatory efforts on a global basis, and we believe this will continue both in scope and in the number of countries participating. In addition, as climate change issues become more prevalent, foreign, federal, state and local governments and our customers have increased their focus on environmental sustainability, which may result in new regulations and customer requirements, which could materially adversely impact our business, results of operations and financial condition. If we are unable to effectively address concerns about environmental impact, our reputation could be negatively impacted, and our business, results of operations or financial condition could suffer.

Any new or modified environmental regulations or laws may increase the cost of raw materials or components we use in our products. Environmental regulations require us to continually reduce product energy usage, monitor and exclude an expanding list of restricted substances and to participate in required recovery and recycling of our products. Environmental and health and safety laws and regulations can be complex, and we have limited experience complying with them. Capital and operating expenses needed to comply with

 

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environmental laws and regulations can be significant, and violations may result in substantial fines and penalties, third-party damages, suspension of production or a cessation of our operations.

If contamination is found at properties we operate or formerly operated, this may result in liability for us under environmental laws and regulations, including the Comprehensive Environmental Response, Compensation and Liability Act, which can impose liability for the full amount of remediation-related costs without regard to fault. Costs of complying with environmental laws and regulations and any claims concerning noncompliance, or liability with respect to contamination in the future, could have a material adverse effect on our financial condition or operating results.

We are subject to U.S. and foreign anti-corruption and anti-money laundering laws. We can face criminal liability and other serious consequences for violations, which can harm our business.

We are subject to the U.S. Foreign Corrupt Practices Act, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the Money Laundering Control Act 18 U.S.C. §§ 1956 and 1957, and other anti-bribery and anti-money laundering laws in countries in which we conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors and other collaborators from authorizing, promising, offering or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector and failing to prevent bribery, and require that we keep accurate books and records and maintain internal accounting controls designed to prevent any such actions. We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors and other collaborators, even if we do not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences.

As we increase our international cross-border business and expand our operations abroad, we may continue to engage with business partners and third-party intermediaries to market our services and to obtain necessary permits, licenses and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners and agents, even if we do not explicitly authorize such activities. We cannot assure you that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. As we increase our international business, our risks under these laws may increase.

Detecting, investigating and resolving actual or alleged violations of anti-corruption laws can require a significant diversion of time, resources and attention from management. In addition, noncompliance with anti-corruption or anti-bribery laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage and other collateral consequences. If any subpoenas are received or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our business, operating results and financial condition could be materially harmed.

Our business may be adversely affected if it fails to comply with the regulatory requirements under the Federal Food, Drug, and Cosmetic Act or the Food and Drug Administration (the “FDA”).

As a lidar technology company, we are subject to the Electronic Product Radiation Control Provisions of the Federal Food, Drug, and Cosmetic Act. These requirements are enforced by the FDA. Electronic product radiation includes laser technology. Regulations governing these products are intended to protect the public from hazardous or unnecessary exposure. Manufacturers are required to certify in product labeling and in reports to the

 

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FDA that their products comply with applicable performance standards as well as maintain manufacturing, testing, and distribution records for their products. Failure to comply with these requirements could result in enforcement action by the FDA, which could require us to cease distribution of our products, recall or remediate products already distributed to customers, or subject us to FDA enforcement.

Failures, or perceived failures, to comply with privacy, data protection, and information security requirements in the variety of jurisdictions in which we operate may adversely impact our business, and such legal requirements are evolving, uncertain and may require improvements in, or changes to, our policies and operations.

Our current and potential future operations and sales subject us to laws and regulations addressing privacy and the collection, use, storage, disclosure, transfer and protection of a variety of types of data. For example, the European Commission has adopted the General Data Protection Regulation and California recently enacted the California Consumer Privacy Act of 2018, both of which provide for potentially material penalties for non-compliance. These regimes may, among other things, impose data security requirements, disclosure requirements, and restrictions on data collection, uses, and sharing that may impact our operations and the development of our business. While, generally, we do not have access to, collect, store, process, or share information collected by our customers using our products unless our customers choose to proactively provide such information to us. Our products may evolve both to address potential customer requirements or to add new features and functionality. Therefore, the full impact of these privacy regimes on our business is rapidly evolving across jurisdictions and remains uncertain at this time.

We may also be affected by cyber-attacks and other means of gaining unauthorized access to our products, systems, and data. For instance, cyber criminals or insiders may target us or third parties with which we have business relationships to obtain data, or in a manner that disrupts our operations or compromises our products or the systems into which our products are integrated.

We are assessing the continually evolving privacy and data security regimes and measures we believe are appropriate in response. Since these data security regimes are evolving, uncertain and complex, especially for a global business like ours, we may need to update or enhance our compliance measures as our products, markets and customer demands further develop, and these updates or enhancements may require implementation costs. In addition, we may not be able to monitor and react to all developments in a timely manner. The compliance measures we do adopt may prove ineffective. Any failure, or perceived failure, by us to comply with current and future regulatory or customer-driven privacy, data protection, and information security requirements, or to prevent or mitigate security breaches, cyber-attacks, or improper access to, use of, or disclosure of data, or any security issues or cyber-attacks affecting us, could result in significant liability, costs (including the costs of mitigation and recovery), and a material loss of revenue resulting from the adverse impact on our reputation and brand, loss of proprietary information and data, disruption to our business and relationships, and diminished ability to retain or attract customers and business partners. Such events may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties or adverse publicity, and could cause customers and business partners to lose trust in us, which could have an adverse effect on our reputation and business.

Risks Related to Our Intellectual Property

We may not be able to adequately protect or enforce our intellectual property rights or prevent competitors or other unauthorized parties from copying or reverse engineering our technology.

Our success depends in part on our ability to obtain patents and other intellectual property rights covering our technology and products, and to maintain adequate legal protection for our technology and products in the United States and worldwide. We rely on patent, service mark, trademark and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protections.

 

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We can make no assurances whether any of our pending patent applications will mature into issued patents, or that any of our pending trademark applications will be registered, in a manner that gives us any or adequate defensive protection or competitive advantages. We also do not know whether any patents issued to us or any trademarks registered by us will not be challenged, invalidated or circumvented. Our portfolio of currently-issued patents and registered trademarks, and any patents that may be issued and trademarks that may be registered in the future, may not provide sufficiently broad protections to us, or may not prove to be enforceable in actions against alleged infringers. We cannot be certain that the actions we have undertaken to protect our technology and products will prevent unauthorized use of our technology or the reverse engineering of our products. Moreover, others may independently develop technologies and products that compete with ours, or infringe our intellectual property.

We have filed for patents and trademarks in the United States and in certain international jurisdictions, but such protections may not be available, and we may not have applied for protections in all countries in which we operate or sell our products. Though we may have obtained patents and trademarks in various jurisdictions, it may prove difficult to enforce our intellectual property rights in practice. Discovering and protecting against unauthorized use of our intellectual property, products and other proprietary rights is expensive and difficult, particularly internationally. We believe that our patents are foundational in the area of lidar products, and intend to enforce our intellectual property rights. Competitors and other unauthorized parties may attempt to copy or reverse engineer our lidar technology and other aspects of our solutions that we consider proprietary. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to prevent unauthorized parties from copying or reverse engineering our products, to determine the validity and scope of the proprietary rights of others or to block the importation of infringing products into the United States or other markets.

Any intellectual property litigation, if it is initiated in the future by us or a third party, would result in substantial costs and diversion of management resources, either of which could adversely affect our business, operating results and financial condition. Even if we obtain favorable outcomes in any such litigation, we may not be able to obtain adequate remedies, or may have incurred costs that threaten our financial stability. Our attempts to enforce our rights against third parties could also provoke these third parties to assert their own intellectual property or other rights against us or result in invalidation or a narrowed scope of our rights, in whole or in part. Effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which our products are available, and competitors based in other countries may sell infringing products in one or more markets. Failure to adequately protect our intellectual property rights could result in our competitors offering similar products, potentially resulting in the loss of some of our competitive advantage, market share and a decrease in our revenue, which would adversely affect our business, operating results, financial condition and prospects.

Claims that we are infringing third-party intellectual property, whether successful or not, could subject us to costly and time-consuming litigation or expensive licenses, and adversely affect our business.

Lidar is a heavily populated intellectual property field, in which many companies, both within and outside of the lidar industry, hold patents covering lidar products and other adjacent technologies. In addition to patents, companies in the lidar industry typically rely on copyrights and trade secrets to protect their technology. As a result, there has been frequent litigation in the lidar industry based on allegations of patent infringement, misappropriation or other violations of intellectual property rights. We have, and in the future may, receive inquiries from other intellectual property holders and we may become subject to claims that we infringe others’ intellectual property rights, particularly as our market presence increases, as our products expand to new use cases and geographies, and as we face increasing competition. In addition, parties may claim that our name and the branding of our products infringe their trademark rights in certain countries or territories. If such a claim were to prevail, we may have to change the names of and branding of our products in the affected territories which would be costly and could cause market confusion.

We currently have various agreements in effect pursuant to which we have agreed to defend, indemnify and hold harmless our customers, suppliers, and other partners from damages and costs which may arise from the

 

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infringement by our products of third-party patents or other intellectual property rights. The scope of these indemnity obligations vary, but may, in some instances, include indemnification for damages and expenses, including attorneys’ fees. Our insurance may not cover all intellectual property infringement claims. A claim that our products infringe a third party’s intellectual property rights, even if untrue, could adversely affect our relationships with our customers, may deter future customers from purchasing our products and could expose us to time-consuming and costly litigation and settlement expenses. Even if we are not a party to any litigation between a customer and a third party relating to infringement of its products, an adverse outcome in any such litigation could make it more difficult for us to defend our products against intellectual property infringement claims in any subsequent litigation matter in which we are a named party. Any of these results could adversely affect our brand and operating results.

Our defense of intellectual property rights claims brought against us or our customers, suppliers or partners, with or without merit, could be time-consuming and expensive to litigate or settle. Such claims may also divert management resources and attention away from other business efforts and force us to acquire intellectual property rights and licenses, which may involve substantial royalty or other payments that may not be acceptable to us. Further, a party making such a claim against us, if successful, could secure a judgment that requires us to pay substantial damages or such a party could obtain an injunction. An adverse determination also could invalidate our intellectual property rights and adversely affect our ability to offer our products to our customers and may require that we procure or develop substitute products that do not infringe, which could require significant effort and expense. Any of these events could adversely affect our business, operating results, financial condition and prospects.

Our intellectual property applications may not issue or be registered, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.

We cannot be certain that we are the first inventor of the subject matter to which we have filed any particular patent application, or if we are the first party to file such a patent application. If another party has filed a patent application to, or otherwise publicly disclosed, subject matter that we are seeking to protect in a given patent application, we may not be entitled to the protection sought by the patent application. We also cannot be certain whether the claims included in a patent application will ultimately be granted as an issued patent since the patent office of the jurisdiction in which a patent application is filed may rule that the subject matter we are seeking to patent is not novel or is obvious or otherwise non-inventive or rule that the patent application and/or claims of the patent application do not comply with one or more other requirements of the patent laws of the jurisdiction. Further, the scope of protection of issued patent claims is often difficult to determine. As a result, we cannot be certain that our issued patents will afford protection against competitors with similar technology. In addition, our competitors may design around our issued patents, which may adversely affect our business, prospects, financial condition and operating results.

In addition to patented technology, we rely on our unpatented proprietary technology, trade secrets, processes and know-how.

We rely on proprietary information (including, for example, trade secrets, know-how and confidential information) to protect intellectual property that may not be patentable or subject to copyright, trademark, trade dress or service mark protection, or that we believe is best protected by means that do not require public disclosure. We generally seek to protect this proprietary information by entering into confidentiality agreements, or consulting, services or employment agreements that contain non-disclosure and non-use provisions with our employees, consultants, contractors and third parties. We may fail, however, to enter into the necessary agreements, and even if properly executed and entered into, these agreements may be breached or may otherwise fail to prevent disclosure, third-party infringement or misappropriation of our proprietary information, may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure or use of proprietary information. Additionally, we have limited control over the protection of trade secrets used by our current or future manufacturing partners and suppliers and could lose future trade secret protection if any

 

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unauthorized disclosure of such information occurs. In addition, our proprietary information may otherwise become known or be independently developed by our competitors or other third parties. To the extent that our employees, consultants, contractors, advisors and other third parties use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain protection for our proprietary information could adversely affect our competitive business position. Furthermore, laws regarding trade secret rights in certain markets where we operate may afford little or no protection to our trade secrets.

We also rely on security measures, both physical and electronic, to protect our proprietary information, but we cannot provide assurance that these security measures will not be breached or provide adequate protection for our property. There is a risk that third parties may obtain and improperly utilize our proprietary information to our competitive disadvantage. Also, we may not be able to detect or prevent the unauthorized use of such information or take appropriate and timely steps to enforce our intellectual property rights.

We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our employees’ former employers.

We may be subject to claims that we or our employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of one or more of an employee’s former employers. Litigation may be necessary to defend us against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability to commercialize our products, which could severely harm our business. Even if we are successful in defending against any such claims, litigation could result in substantial costs and demand on management resources.

Risks Related to Becoming a Public Company

We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations or cause our access to the capital markets to be impaired.

In connection with the preparation of our consolidated financial statements as of and for the fiscal years ended December 31, 2019 and 2018, we identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We did not design or maintain an effective control environment commensurate with our financial reporting requirements. Specifically, we did not maintain a sufficient complement of personnel with an appropriate degree of internal controls and accounting knowledge, experience, and training commensurate with our accounting and reporting requirements. This material weakness contributed to the following additional material weaknesses:

 

   

We did not design and maintain effective controls over the period-end financial reporting process to achieve complete, accurate and timely financial accounting, reporting and disclosures, including segregation of duties and adequate controls related to journal entries and certain other business processes, and verifying transactions are properly classified in the financial statements. This material weakness resulted in immaterial adjustments to several account balances and disclosures in the consolidated financial statements for the years ended December 31, 2019 and 2018.

 

   

We did not design and maintain effective controls over certain information technology (“IT”) general controls for information systems that are relevant to the preparation of our consolidated financial

 

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statements. Specifically, we did not design and maintain (i) program change management controls to ensure that information technology program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately and (ii) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to our financial applications, programs and data to appropriate personnel. This material weakness did not result in a material misstatement to the consolidated financial statements, however, the deficiencies, when aggregated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected.

Each of these material weaknesses could result in a misstatement of account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

We have begun implementation of a plan to remediate these material weaknesses. These remediation measures are ongoing and include hiring additional accounting and financial reporting personnel and implementing additional policies, procedures and controls.

To address these material weaknesses, we continue to take actions to improve our IT general controls, segregation of duties controls, period-end financial reporting controls, and journal entry controls. In particular, we are implementing comprehensive access control protocols for our enterprise resource planning environment to implement restrictions on user and privileged access to certain applications, establishing additional controls over the preparation and review of journal entries, establishing additional controls to verify transactions are properly classified in the financial statements, implementing controls to review the activities for those users who have privileged access and program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately. While we are undertaking efforts to remediate these material weaknesses, the material weaknesses will not be considered remediated until our remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively. At this time, we cannot predict the success of such efforts or the outcome of our assessment of the remediation efforts. We can give no assurance that our efforts will remediate these material weaknesses in our internal control over financial reporting, or that additional material weaknesses will not be identified in the future. Our failure to implement and maintain effective internal control over financial reporting could result in errors in our consolidated financial statements that could result in a restatement of our financial statements, and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in us and cause a decline in the price of our common stock. Additionally, ineffective internal controls could expose us to an increased risk of financial reporting fraud and the misappropriation of assets and subject us to potential delisting from the stock exchange on which we list or to other regulatory investigations and civil or criminal sanctions.

As a public company, we will be required pursuant to Section 404 of the Sarbanes-Oxley Act to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for each annual report on Form 10-K to be filed with the SEC. This assessment will need to include disclosure of any material weaknesses identified by our management in internal control over financial reporting. Once we cease to be an emerging growth company, our independent registered public accounting firm will also be required to attest to the effectiveness of our internal control over financial reporting in each annual report on Form 10-K to be filed with the SEC. We will be required to disclose material changes made in our internal control over financial reporting on a quarterly basis. Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC, the stock exchange on which our securities are

 

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listed or other regulatory authorities, which would require additional financial and management resources. We have begun the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404, but we may not be able to complete our evaluation, testing and any required remediation in a timely fashion.

We will incur increased costs as a result of operating as a public company, and our management will devote substantial time to new compliance initiatives.

If we complete the Business Combination and become a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company, and these expenses may increase even more after we are no longer an emerging growth company, as defined under federal securities laws. As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), as well as rules adopted, and to be adopted, by the SEC and the applicable stock exchange. Our management and other personnel, many of whom have limited experience managing a public company, will need to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be forced to accept reduced policy limits or incur substantially higher costs to maintain the same or similar coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

General Risk Factors

Our business, results of operations and financial condition have been and could continue to be adversely affected by the COVID-19 pandemic.

The COVID-19 pandemic has caused significant volatility and disruption globally. The COVID-19 measures adopted by governments and businesses, including restrictions on travel and business operations and shelter in place and other quarantine orders, have affected our business, and could continue to adversely affect our business operations or the business operations of our customers. The COVID-19 pandemic has impacted our business by slowing the pace of manufacturing ramp up due to employees’ inability to travel to our manufacturing facility in Thailand, temporarily disrupting the operations of certain of our suppliers, and resulting in increased costs of overtime pay and additional personnel in San Francisco to create separate manufacturing teams that rotate every other week in our facility to avoid any possible transmission of COVID-19 between teams. The full impact of the COVID-19 pandemic on our operations is unknown and will depend on factors outside of our control. The duration of the ongoing COVID-19 pandemic and the associated business interruptions may affect our sales, supply chain or the manufacture or distribution of products, which could result in a material adverse effect on our financial condition. Our response to the ongoing COVID-19 pandemic may prove to be inadequate. We may be unable to continue our operations in the manner that we did prior to the outbreak and we may endure interruptions, reputational harm, delays in product development and shipments, all of which could have an adverse effect on our business, operating results, and financial condition. The COVID-19 pandemic may also intensify or exacerbate other risks described in this Section.

Our facilities in California are located near an earthquake fault and an earthquake or other natural disaster or resource shortage could disrupt our operations.

Important documents and records for our products and manufacturing operations are located in our various facilities in San Francisco, California near active earthquake zones. In the event of a natural disaster such as an earthquake, drought, flood or fire or localized extended outages of critical utilities or transportation we do not

 

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have a formal business continuity or disaster recovery plan, and therefore could experience a significant business interruption. In addition, California has from time to time experienced shortages of water, natural gas, and electric power. Future shortages and conservation measures could impact our operations and result in increased expense. In addition, we rely on information technology systems to communicate among our workforce and with third parties. Any disruption to our communications, whether caused by a natural disaster or by man made problems, such as power disruptions, could adversely affect our business. To the extent that any such disruptions result in delays or cancellations of orders or impede our suppliers’ ability to timely deliver product components, our business, operating results and financial condition would be adversely affected.

We are subject to cybersecurity risks to operational systems, security systems, infrastructure, firmware in our lidar and customer data processed by us or third-party vendors or suppliers and any material failure, weakness, interruption, cyber event, incident or breach of security could prevent us from effectively operating our business.

We are at risk for interruptions, outages and breaches of: operational systems, including business, financial, accounting, product development, data processing or production processes, owned by us or our third-party vendors or suppliers; facility security systems, owned by us or our third-party vendors or suppliers; in-product technology owned by us or our third-party vendors or suppliers; the integrated software in our lidar solutions; or customer or driver data that we process or our third-party vendors or suppliers process on our behalf. Such cyber incidents could materially disrupt operational systems; result in loss of intellectual property, trade secrets or other proprietary or competitively sensitive information; compromise certain information of customers, employees, suppliers, drivers or others; jeopardize the security of our facilities; or affect the performance of in-product technology and the integrated software in our lidar solutions. A cyber incident could be caused by disasters, insiders (through inadvertence or with malicious intent) or malicious third parties (including nation-states or nation-state supported actors) using sophisticated, targeted methods to circumvent firewalls, encryption and other security defenses, including hacking, fraud, trickery or other forms of deception. The techniques used by cyber attackers change frequently and may be difficult to detect for long periods of time. Although we maintain information technology measures designed to protect us against intellectual property theft, data breaches and other cyber incidents, such measures will require updates and improvements, and we cannot guarantee that such measures will be adequate to detect, prevent or mitigate cyber incidents. The implementation, maintenance, segregation and improvement of these systems requires significant management time, support and cost. Moreover, there are inherent risks associated with developing, improving, expanding and updating current systems, including the disruption of our data management, procurement, production execution, finance, supply chain and sales and service processes. These risks may affect our ability to manage our data and inventory, procure parts or supplies or produce, sell, deliver and service our solutions, adequately protect our intellectual property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts. We cannot be sure that the systems upon which we rely, including those of our third-party vendors or suppliers, will be effectively implemented, maintained or expanded as planned. If we do not successfully implement, maintain or expand these systems as planned, our operations may be disrupted, our ability to accurately and timely report our financial results could be impaired, and deficiencies may arise in our internal control over financial reporting, which may impact our ability to certify our financial results. Moreover, our proprietary information or intellectual property could be compromised or misappropriated and our reputation may be adversely affected. If these systems do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

A significant cyber incident could impact production capability, harm our reputation, cause us to breach our contracts with other parties or subject us to regulatory actions or litigation, any of which could materially affect our business, prospects, financial condition and operating results. In addition, our insurance coverage for cyber-attacks may not be sufficient to cover all the losses we may experience as a result of a cyber incident. Any problems with our third-party cloud hosting providers, whether due to cyber security failures or other causes, could result in lengthy interruptions in our business.

 

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Risks Related to the Business Combination and CLA

Unless the context otherwise requires, all references in this subsection to the “Company,” “we,” “us” or “our” refer to CLA prior to the consummation of the Business Combination.

The Sponsor has agreed to vote in favor of the Business Combination, regardless of how CLA’s public shareholders vote.

The Sponsor and each director and officer of CLA have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in the case of the Sponsor, subject also to the terms and conditions contemplated by the Sponsor Support Agreement. As of the date of this proxy statement/prospectus, the Sponsor owns 20% of CLA’s issued and outstanding ordinary shares.

Neither the CLA board of directors nor any committee thereof obtained a third party valuation in determining whether or not to pursue the Business Combination.

Neither the CLA board of directors nor any committee thereof is required to obtain an opinion that the price that we are paying for Ouster is fair to us from a financial point of view. Neither the CLA board of directors nor any committee thereof obtained a third party valuation in connection with the Business Combination. In analyzing the Business Combination, the CLA board of directors and management conducted due diligence on Ouster. The CLA board of directors reviewed comparisons of selected financial data of Ouster with its peers in the industry and the financial terms set forth in the Merger Agreement, and concluded that the Business Combination was in the best interest of CLA’s shareholders. Accordingly, investors will be relying solely on the judgment of the CLA board of directors and management in valuing Ouster, and the CLA board of directors and management may not have properly valued such businesses. The lack of a third party valuation may also lead an increased number of shareholders to vote against the Business Combination or demand redemption of their shares, which could potentially impact our ability to consummate the Business Combination.

We may be forced to close the Business Combination even if we determined it is no longer in our shareholders’ best interest.

Our public shareholders are protected from a material adverse event of Ouster arising between the date of the Merger Agreement and the Closing primarily by the right to redeem their public shares for a pro rata portion of the funds held in the trust account, calculated as of two business days prior to the vote at the extraordinary general meeting. Accordingly, if a material adverse event were to occur after approval of the Condition Precedent Proposals at the extraordinary general meeting, we may be forced to close the Business Combination even if we determine it is no longer in our shareholders’ best interest to do so (as a result of such material adverse event) which could have a significant negative impact on our business, financial condition or results of operations.

Additionally, if we do not obtain shareholder approval at the extraordinary general meeting, Ouster can obligate us to hold additional extraordinary general meetings to vote on the Condition Precedent Proposals until the earlier of such shareholder approval being obtained and June 30, 2021. This could limit our ability to seek an alternative business combination that our shareholders may prefer after such initial vote.

Since the Sponsor and CLA’s directors and officers have interests that are different, or in addition to (and which may conflict with), the interests of our shareholders, a conflict of interest may have existed in determining whether the Business Combination with Ouster is appropriate as our initial business combination. Such interests include that Sponsor will lose its entire investment in us if our business combination is not completed.

When you consider the recommendation of CLA’s board of directors in favor of approval of the BCA Proposal, you should keep in mind that the Sponsor and CLA’s directors and officers have interests in such

 

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proposal that are different from, or in addition to, those of CLA shareholders and warrant holders generally. These interests include, among other things, the interests listed below:

 

   

Prior to CLA’s initial public offering, the Sponsor purchased 5,750,000 CLA Class B ordinary shares for an aggregate purchase price of $25,000, or approximately $0.005 per share. As a result of the significantly lower investment per share of our Sponsor as compared with the investment per share of our public shareholders, a transaction which results in an increase in the value of the investment of the Sponsor may result in a decrease in the value of the investment of our public shareholders. In addition, if CLA does not consummate a business combination by August 25, 2022 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, liquidating and dissolving, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such event, the 5,000,000 CLA Class B ordinary shares owned by the Sponsor would be worthless because following the redemption of the public shares, CLA would likely have few, if any, net assets and because the Sponsor and CLA’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any CLA Class A ordinary shares and CLA Class B ordinary shares held by it or them, as applicable, if CLA fails to complete a business combination within the required period. Additionally, in such event, the 6,000,000 private placement warrants purchased by the Sponsor simultaneously with the consummation of CLA’s initial public offering for an aggregate purchase price of $6,000,000 will also expire worthless. CLA’s directors and executive officers, Joseph S. Sambuco, Remy W. Trafelet, James C. Flores, Emil W. Henry, Jr. and Manny De Zárraga, also have a direct or indirect economic interest in such private placement warrants and in the 5,000,000 CLA Class B ordinary shares owned by the Sponsor. The 5,000,000 shares of Ouster PubCo common stock into which the 5,000,000 CLA Class B ordinary shares held by the Sponsor will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $76.6 million based upon the closing price of $15.31 per public share on the NYSE on February 9, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. However, given that such shares of Ouster PubCo common stock will be subject to certain restrictions, including those described elsewhere in this proxy statement/prospectus, CLA believes such shares have less value. The 6,000,000 Ouster PubCo warrants into which the 6,000,000 private placement warrants held by the Sponsor will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $21.0 million based upon the closing price of $3.50 per public warrant on the NYSE on February 9, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus.

 

   

Remy W. Trafelet, a current director of CLA, is expected to be a director of Ouster after the consummation of the Business Combination. As such, in the future, Mr. Trafelet may receive fees for his service as a director, which may consist of cash or stock-based awards, and any other remuneration that Ouster’s board of directors determines to pay to its non-employee directors.

 

   

CLA’s existing directors and officers will be eligible for continued indemnification and continued coverage under CLA’s directors’ and officers’ liability insurance after the Merger and pursuant to the Merger Agreement.

 

   

The Sponsor Related PIPE Investor has subscribed for $11,750,000 of the PIPE Investment, for which it will receive 1,175,000 shares of Ouster PubCo common stock. The 1,175,000 shares of Ouster PubCo common stock which the Sponsor Related PIPE Investor has subscribed for in the PIPE Investment, if unrestricted and freely tradable, would have had an aggregate market value of approximately $18.0 million based upon the closing price of $15.31 per public share on the NYSE on February 9, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. See “Certain Relationships and Related Person Transactions—CLA—Subscription Agreements”.

 

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In order to protect the amounts held in CLA’s trust account, the Sponsor has agreed that it will be liable to CLA if and to the extent any claims by a third party for services rendered or products sold to CLA, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, less taxes payable, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under the indemnity of the underwriters of CLA’s initial public offering against certain liabilities, including liabilities under the Securities Act.

 

   

CLA’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them related to identifying, investigating, negotiating and completing an initial business combination. However, if CLA fails to consummate a business combination by August 25, 2022, they will not have any claim against the trust account for reimbursement. Accordingly, CLA may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by such date.

 

   

Pursuant to the Registration Rights Agreement, the Sponsor, certain members of the Sponsor and the Sponsor Related PIPE Investor will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect to the shares of Ouster PubCo common stock and warrants held by such parties following the consummation of the Business Combination.

 

   

The Proposed Certificate of Incorporation will contain a provision expressly electing that Ouster PubCo will not to be governed by Section 203 (Delaware’s “interested stockholder” statute) of the DGCL, although it will provide other restrictions regarding takeovers by interested stockholders.

The existence of financial and personal interests of one or more of CLA’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of CLA and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, CLA’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “—Interests of CLA’s Directors and Officers in the Business Combination” for a further discussion of these considerations.

The personal and financial interests of the Sponsor as well as CLA’s directors and officers may have influenced their motivation in identifying and selecting Ouster as a business combination target, completing an initial business combination with Ouster and influencing the operation of the business following the initial business combination. In considering the recommendations of CLA’s board of directors to vote for the proposals, its shareholders should consider these interests.

The exercise of CLA’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in CLA’s shareholders’ best interest.

In the period leading up to the Closing, events may occur that, pursuant to the Merger Agreement, would require CLA to agree to amend the Merger Agreement, to consent to certain actions taken by Ouster or to waive rights that CLA is entitled to under the Merger Agreement. Such events could arise because of changes in the course of Ouster’s business or a request by Ouster to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement. In any of such circumstances, it would be at CLA’s discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of financial and personal interests of

 

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one or more of the directors described in the preceding risk factors (and described elsewhere in this proxy statement/prospectus) may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is best for CLA and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, CLA does not believe there will be any changes or waivers that CLA’s directors and executive officers would be likely to make after shareholder approval of the BCA Proposal has been obtained. While certain changes could be made without further shareholder approval, CLA will circulate a new or amended proxy statement/prospectus and resolicit CLA’s shareholders if changes to the terms of the transaction that would have a material impact on its shareholders are required prior to the vote on the BCA Proposal.

CLA and Ouster will incur significant transaction and transition costs in connection with the Business Combination.

CLA and Ouster have both incurred and expect to incur significant, non-recurring costs in connection with consummating the Business Combination and operating as a public company following the consummation of the Business Combination. CLA and Ouster may also incur additional costs to retain key employees. Certain transaction costs incurred in connection with the Merger Agreement (including the Business Combination), including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be paid by Ouster PubCo following the closing of the Business Combination.

The announcement of the proposed Business Combination could disrupt Ouster’s relationships with its customers, suppliers, business partners and others, as well as its operating results and business generally.

Whether or not the Business Combination and related transactions are ultimately consummated, as a result of uncertainty related to the proposed transactions, risks relating to the impact of the announcement of the Business Combination on Ouster’s business include the following:

 

   

its employees may experience uncertainty about their future roles, which might adversely affect Ouster PubCo’s ability to retain and hire key personnel and other employees;

 

   

customers, suppliers, business partners and other parties with which Ouster maintains business relationships may experience uncertainty about its future and seek alternative relationships with third parties, seek to alter their business relationships with Ouster or fail to extend an existing relationship with Ouster PubCo; and

 

   

Ouster has expended and will continue to expend significant costs, fees and expenses for professional services and transaction costs in connection with the proposed Business Combination.

If any of the aforementioned risks were to materialize, they could lead to significant costs which may impact Ouster and, in the future, Ouster PubCo’s results of operations and cash available to fund its business.

Subsequent to the consummation of the Business Combination, Ouster PubCo may be exposed to unknown or contingent liabilities and may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and its share price, which could cause you to lose some or all of your investment.

We cannot assure you that the due diligence conducted in relation to Ouster has identified all material issues or risks associated with Ouster, its business or the industry in which it competes. Furthermore, we cannot assure you that factors outside of Ouster’s and our control will not later arise. As a result of these factors, we may be exposed to liabilities and incur additional costs and expenses and we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence has identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. If any of these risks

 

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materialize, this could have a material adverse effect on our financial condition and results of operations and could contribute to negative market perceptions about our securities or Ouster PubCo. Additionally, we have no indemnification rights against the Ouster Stockholders under the Merger Agreement and all of the purchase price consideration will be delivered at the Closing.

Accordingly, any shareholders or warrant holders of CLA who choose to remain Ouster PubCo stockholders or warrant holders following the Business Combination could suffer a reduction in the value of their shares or warrants. Such shareholders or warrant holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our directors or officers of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the registration statement or proxy statement/prospectus relating to the Business Combination contained an actionable material misstatement or material omission.

The historical financial results of Ouster and unaudited pro forma financial information included elsewhere in this proxy statement/prospectus may not be indicative of what Ouster PubCo’s actual financial position or results of operations would have been.

The historical financial results of Ouster included in this proxy statement/prospectus do not reflect the financial condition, results of operations or cash flows they would have achieved as a standalone public company during the periods presented or those Ouster PubCo will achieve in the future. This is primarily the result of the following factors: (i) Ouster PubCo will incur additional ongoing costs as a result of the Business Combination, including costs related to public company reporting, investor relations and compliance with the Sarbanes-Oxley Act; and (ii) Ouster PubCo’s capital structure will be different from that reflected in Ouster’s historical financial statements. Ouster PubCo’s financial condition and future results of operations could be materially different from amounts reflected in its historical financial statements included elsewhere in this proxy statement/prospectus, so it may be difficult for investors to compare Ouster PubCo’s future results to historical results or to evaluate its relative performance or trends in its business.

Similarly, the unaudited pro forma financial information in this proxy statement/prospectus is presented for illustrative purposes only and has been prepared based on a number of assumptions including, but not limited to, CLA being treated as the “acquired” company for financial reporting purposes in the Business Combination, the total debt obligations and the cash and cash equivalents of Ouster on the Closing Date and the number of CLA Class A ordinary shares that are redeemed in connection with the Business Combination. Accordingly, such pro forma financial information may not be indicative of Ouster PubCo’s future operating or financial performance and Ouster PubCo’s actual financial condition and results of operations may vary materially from Ouster PubCo’s pro forma results of operations and balance sheet contained elsewhere in this proxy statement/prospectus, including as a result of such assumptions not being accurate. See “Unaudited Pro Forma Condensed Combined Financial Information.”

Following the consummation of the Business Combination, our only significant asset will be our ownership interest in Ouster and such ownership may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on Ouster PubCo common stock or satisfy our other financial obligations.

Following the consummation of the Business Combination, we will have no direct operations and no significant assets other than our ownership of Ouster. We and certain investors, the Ouster Stockholders, and directors and officers of Ouster and its affiliates will become stockholders of Ouster PubCo. We will depend on Ouster for distributions, loans and other payments to generate the funds necessary to meet our financial obligations, including our expenses as a publicly traded company and to pay any dividends with respect to Ouster PubCo common stock. The financial condition and operating requirements of Ouster may limit our ability to obtain cash from Ouster. The earnings from, or other available assets of, Ouster may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on Ouster PubCo common stock or satisfy our other financial obligations.

 

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This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our Business Combination.

We have a specified maximum redemption threshold. This redemption threshold may make it more difficult for us to complete the Business Combination as contemplated.

The Merger Agreement provides that Ouster’s obligation to consummate the Business Combination is conditioned on, among other things, that as of the Closing, the Minimum Cash Condition is satisfied.

This condition is for the sole benefit of Ouster. If such condition is not met, and such condition is not or cannot be waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated. The Merger Agreement also contains a mutual condition that CLA as of the Closing, CLA shall have net tangible assets of at least $5,000,001.

There can be no assurance that Ouster could and would waive the Minimum Cash Condition. Furthermore, as provided in the Cayman Constitutional Documents, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. If such conditions are not met, and such conditions are not or cannot be waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated.

If such conditions are waived and the Business Combination is consummated with less than the Minimum Available Cash Amount in the trust account, the cash held by Ouster PubCo and its subsidiaries (including Ouster) in the aggregate, after the Closing may not be sufficient to allow us to operate and pay our bills as they become due. Furthermore, our affiliates are not obligated to make loans to us in the future (other than our Sponsor’s commitment to provide us loans in order to finance transaction costs in connection with a business combination). The additional exercise of redemption rights with respect to a large number of our public shareholders may make us unable to take such actions as may be desirable in order to optimize the capital structure of Ouster PubCo after consummation of the Business Combination and we may not be able to raise additional financing from unaffiliated parties necessary to fund our expenses and liabilities after the Closing. Any such event in the future may negatively impact the analysis regarding our ability to continue as a going concern at such time.

Certain insiders may elect to purchase shares from public shareholders prior to the consummation of the Business Combination, which may influence the vote on the Business Combination and reduce the public “float” of our securities.

At any time at or prior to the Business Combination, during a period when they are not then aware of any material non-public information regarding us or CLA’s securities, the Sponsor, Ouster or our or their respective directors, officers, advisors or respective affiliates may purchase public shares or warrants from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares or warrants from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares or warrants or vote their public shares in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record holder of CLA’s shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, Ouster or their directors, officers, advisors or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of (1) satisfaction of the requirement that holders of a majority of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the BCA Proposal, the Stock Issuance Proposal, the

 

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Incentive Award Plan Proposal and the Adjournment Proposal, (2) satisfaction of the requirement that holders of a majority of at least two-thirds of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the Domestication Proposal and the Organizational Documents Proposals, (3) satisfaction of the Minimum Cash Condition, (4) otherwise limiting the number of public shares electing to redeem and (5) CLA’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) being at least $5,000,001. The purpose of such purchases of public warrants would be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination.

Entering into any such arrangements may have a depressive effect on the ordinary shares (e.g., by giving an investor or holder the ability to effectively purchase shares or warrants at a price lower than market, such investor or holder may therefore become more likely to sell the shares he or she owns, either at or prior to the Business Combination). If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares or warrants by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved. In addition, if such purchases are made, the public “float” of our securities and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.

We are not registering the shares of Ouster PubCo common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants at that time and potentially causing such warrants to expire worthless.

We are not registering the shares of Ouster PubCo common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the Warrant Agreement, we have agreed that, as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement covering the issuance of such shares, and we will use our best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement and a current prospectus relating thereto until the warrants expire or are redeemed. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current, complete or correct or the SEC issues a stop order relating to such registration statement. Beginning on the 61st day following the closing of the business combination, if the shares issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the above requirements, holders of warrants who seek to exercise their warrants will not be permitted to do so for cash and, instead, will be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. In no event will warrants be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration or qualification is available. If the Ouster PubCo common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit holders of warrants who seek to exercise their warrants to do so for cash and, instead, require them to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we will not be required to file or maintain in effect a registration statement for the registration, under the Securities Act, of the shares issuable upon exercise of the warrants, and in the event we do not so elect, we will use our best efforts to register or qualify the shares underlying the warrants under applicable state securities laws to the extent an exemption is not available. In no event will we be required to net cash settle any warrant exercise. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant shall not be

 

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entitled to exercise such warrant, other than on a cashless basis in certain circumstances, and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Ouster PubCo common stock included in the units. There may be a circumstance where an exemption from registration exists for holders of our private placement warrants to exercise their warrants while a corresponding exemption does not exist for holders of the public warrants. In such an instance, the Sponsor and its permitted transferees (which may include our directors and executive officers) would be able to exercise their warrants and sell the Ouster PubCo common stock underlying their warrants while holders of our public warrants would not be able to exercise their warrants and sell the underlying shares of Ouster PubCo common stock. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying shares of Ouster PubCo common stock for sale under all applicable state securities laws. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise their warrants.

If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received by shareholders may be less than $10.00 per share (which was the offering price per unit in CLA’s initial public offering).

Our placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will consider whether competitive alternatives are reasonably available to us and will only enter into an agreement with such third party if management believes that such third party’s engagement would be in the best interests of the company under the circumstances.

Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we have not completed our business combination within the required time period, or upon the exercise of a redemption right in connection with our business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per share redemption amount received by public shareholders could be less than the $10.00 per public share initially held in the trust account, due to claims of such creditors.

The Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, less taxes payable, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be

 

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responsible to the extent of any liability for such third party claims. We have not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities of our company. The Sponsor may not have sufficient funds available to satisfy those obligations. We have not asked the Sponsor to reserve for such obligations, and therefore, no funds are currently set aside to cover any such obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our directors or officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

If, after we distribute the proceeds in the trust account to our public shareholders, CLA files a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board of directors may be exposed to claims of punitive damages.

If, after we distribute the proceeds in the trust account to our public shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or insolvency laws as a voidable performance. As a result, a liquidator could seek to recover all amounts received by our shareholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors or having acted in bad faith, thereby exposing it and us to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.

If, before distributing the proceeds in the trust account to our public shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.

If, before distributing the proceeds in the trust account to our public shareholders, we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable insolvency law, and may be included in our liquidation estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any liquidation claims deplete the trust account, the per share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.

Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.

If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors or may have acted in bad faith, and thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of $18,293 and to imprisonment for five years in the Cayman Islands.

 

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The public stockholders will experience immediate dilution as a consequence of the issuance of Ouster PubCo common stock as consideration in the Business Combination and the PIPE Investment and due to future issuances pursuant to the 2021 Plan. Having a minority share position may reduce the influence that our current stockholders have on the management of Ouster PubCo.

It is anticipated that, following the Business Combination, (1) our public stockholders are expected to own approximately 12.5% of the outstanding Ouster PubCo common stock, (2) the Ouster Stockholders (without taking into account any public shares held by the Ouster Stockholders prior to the consummation of the Business Combination or purchased in the PIPE Investment) are expected to collectively own approximately 78.2% of the outstanding Ouster PubCo common stock, (3) the Third Party PIPE Investors are expected to collectively own approximately 5.5% of the outstanding Ouster PubCo common stock and (4) the Sponsor (including the Sponsor Related PIPE Investor) are expected to collectively own approximately 3.8% of the outstanding Ouster PubCo common stock. These percentages assume (i) that no public shareholders exercise their redemption rights in connection with the Business Combination, and (ii) Ouster PubCo issues 10,000,000 shares of Ouster PubCo common stock to the PIPE Investors pursuant to the PIPE Investment. If the actual facts are different from these assumptions, the percentage ownership retained by CLA’s existing shareholders in the combined company will be different.

In addition, Ouster employees and consultants hold, and after Business Combination, are expected to be granted, equity awards under the 2021 Plan. You will experience additional dilution when those equity awards and purchase rights become vested and settled or exercisable, as applicable, for shares of Ouster PubCo common stock.

The issuance of additional common stock will significantly dilute the equity interests of existing holders of CLA securities and may adversely affect prevailing market prices for our public shares or public warrants.

Warrants will become exercisable for Ouster PubCo common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

Outstanding warrants to purchase an aggregate of 16,000,000 shares of Ouster PubCo common stock will become exercisable in accordance with the terms of the Warrant Agreement governing those securities. These warrants will become exercisable at any time commencing on the later of 30 days after the completion of the Business Combination and 12 months from the closing of CLA’s initial public offering. The exercise price of these warrants will be $11.50 per share. To the extent such warrants are exercised, additional shares of Ouster PubCo common stock will be issued, which will result in dilution to the holders of Ouster PubCo 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 or the fact that such warrants may be exercised could adversely affect the market price of Ouster PubCo common stock. However, there is no guarantee that the public warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless. See “—Even if the Business Combination is consummated, the public warrants may never be in the money, and they may expire worthless and the terms of the warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment.”

Even if the Business Combination is consummated, the public warrants may never be in the money, and they may expire worthless and the terms of the warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment.

The warrants were issued in registered form under a Warrant Agreement between Continental Stock Transfer & Trust Company, as warrant agent, and CLA. The Warrant Agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change that increases the exercise price or shortens the exercise period of the public warrants.

 

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Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease the number of shares of Ouster PubCo common stock purchasable upon exercise of a warrant.

We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of the shares of Ouster PubCo common stock equals or exceeds $18.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption to the warrants holders and provided certain other conditions are met. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares issuable upon exercise of the warrants is effective and a current prospectus relating to those shares is available throughout the 30-day redemption period, except if we elect to require the warrants to be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants, if you do not otherwise exercise you warrants, as permitted under the warrant agreement, before the redemption date. None of the private placement warrants will be redeemable by us so long as they are held by the sponsor or any of its permitted transferees.

There can be no assurance that the shares of Ouster PubCo common stock that will be issued in connection with the Business Combination will be approved for listing on the NYSE following the Closing, or that Ouster PubCo will be able to comply with the continued listing rules of the NYSE.

CLA’s units, public shares and public warrants are currently listed on the NYSE. The continued eligibility for listing of Ouster PubCo’s securities may depend on, among other things, the number of our shares that are redeemed. If, after the Business Combination, the NYSE delists the shares of Ouster PubCo common stock or public warrants from trading on its exchange for failure to meet its listing rules, Ouster PubCo and its stockholders could face significant material adverse consequences including:

 

   

a limited availability of market quotations for our securities;

 

   

reduced liquidity for our securities;

 

   

a determination that shares of Ouster PubCo common stock is a “penny stock” which will require brokers trading in shares of Ouster PubCo common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

 

   

a limited amount of news and analyst coverage; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” The Ouster PubCo common stock and public warrants are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of

 

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covered securities in a particular case. While we are not aware of a state, other than the state of Idaho, having used these powers to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if Ouster PubCo’s securities were no longer listed on the NYSE, such securities would not qualify as covered securities and Ouster PubCo would be subject to regulation in each state in which it offers its securities.

CLA’s and Ouster’s ability to consummate the Business Combination, and the operations of Ouster PubCo following the Business Combination, may be materially adversely affected by the recent coronavirus (COVID-19) pandemic.

The COVID-19 pandemic has resulted, and other infectious diseases could result, in a widespread health crisis that has and could continue to adversely affect the economies and financial markets worldwide, which may delay or prevent the consummation of the Business Combination, and the business of Ouster or Ouster PubCo following the Business Combination could be materially and adversely affected. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted.

The parties will be required to consummate the Business Combination even if Ouster, its business, financial condition and results of operations are materially affected by COVID-19. The disruptions posed by COVID-19 have continued, and other matters of global concern may continue, for an extensive period of time, and if Ouster is unable to recover from business disruptions due to COVID-19 or other matters of global concern on a timely basis, Ouster’s ability to consummate the Business Combination and Ouster PubCo’s financial condition and results of operations following the Business Combination may be materially adversely affected. Each of Ouster and Ouster PubCo may also incur additional costs due to delays caused by COVID-19, which could adversely affect Ouster PubCo’s financial condition and results of operations.

Additional Risks Related to Ownership of Ouster PubCo Common Stock Following the Business Combination and Ouster PubCo Operating as a Public Company

Ouster PubCo does not intend to pay cash dividends for the foreseeable future.

Following the Business Combination, Ouster PubCo currently intends to retain its future earnings, if any, to finance the further development and expansion of its business and does not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of Ouster PubCo’s board of directors and will depend on its financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as its board of directors deems relevant.

If analysts do not publish research about Ouster PubCo’s business or if they publish inaccurate or unfavorable research, Ouster PubCo’s stock price and trading volume could decline.

The trading market for the common stock of Ouster PubCo will depend in part on the research and reports that analysts publish about its business. Ouster does not have any control over these analysts. If one or more of the analysts who cover Ouster PubCo downgrade its common stock or publish inaccurate or unfavorable research about its business, the price of its common stock would likely decline. If few analysts cover Ouster PubCo, demand for its common stock could decrease and its common stock price and trading volume may decline. Similar results may occur if one or more of these analysts stop covering Ouster PubCo in the future or fail to publish reports on it regularly.

Ouster PubCo may be subject to securities litigation, which is expensive and could divert management attention.

The market price of Ouster PubCo’s common stock may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation.

 

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Ouster PubCo may be the target of this type of litigation in the future. Securities litigation against Ouster PubCo could result in substantial costs and divert management’s attention from other business concerns, which could seriously harm its business.

Future resales of Ouster PubCo common stock after the consummation of the Business Combination may cause the market price of Ouster PubCo’s securities to drop significantly, even if Ouster PubCo’s business is doing well.

Pursuant to the Registration Rights Agreement and the Proposed Bylaws, after the consummation of the Business Combination and subject to certain exceptions, the Sponsor and the Ouster Stockholders will be contractually restricted from selling or transferring any of its shares of common stock (not including the shares of Ouster PubCo common stock issued in the PIPE Investment pursuant to the terms of the Subscription Agreements) (the “Lock-up Shares”). Such restrictions begin at Closing and end on (i) for the Lock-up Shares held by the Ouster Stockholders, the date that is 180 days after the Closing and (ii) for the Lock-up Shares held by the Sponsor, on the earlier of (A) one year after the Closing and (B) subsequent to the Closing, (x) if the closing price of the Ouster PubCo common stock equals or exceeds $12.00 per share (as adjusted) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Closing or (y) the date on which the Company completes a liquidation, merger, amalgamation, capital stock exchange, reorganization or other similar transaction that results in all of the its public stockholders having the right to exchange their shares of Ouster PubCo common stock for cash, securities or other property.

However, following the expiration of such lockup, the Sponsor and the Ouster Stockholders will not be restricted from selling shares of Ouster PubCo’s common stock held by them, other than by applicable securities laws. Additionally, the Third Party PIPE Investors will not be restricted from selling any of their shares of our common stock following the closing of the Business Combination, other than by applicable securities laws. As such, sales of a substantial number of shares of Ouster PubCo common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of Ouster PubCo common stock. Upon completion of the Business Combination, the Sponsor and the Ouster Stockholders (not including the shares of Ouster PubCo common stock issued in the PIPE Investment pursuant to the terms of the Subscription Agreements and including the shares of Ouster PubCo common stock reserved in respect of Ouster Awards outstanding as of immediately prior to the Closing that will be converted into awards based on Ouster PubCo common stock) will collectively own approximately 94.5% of the outstanding shares of Ouster PubCo common stock, assuming that no additional public shareholders redeem their public shares in connection with the Business Combination. Assuming redemption of 20,000,000 public shares are redeemed in connection with the Business Combination, in the aggregate, the ownership of the Sponsor and the Ouster Stockholders would fall to 93.4% of the outstanding shares of Ouster PubCo common stock (not including the shares of Ouster PubCo common stock issued in the PIPE Investment pursuant to the terms of the Subscription Agreements and including the shares of Ouster PubCo common stock reserved in respect of Ouster Awards outstanding as of immediately prior to the Closing that will be converted into awards based on Ouster PubCo common stock).

The shares held by Sponsor and the Ouster Stockholders may be sold after the expiration of the applicable lock-up period under the Registration Rights Agreement and Proposed Bylaws. As restrictions on resale end and registration statements (filed after the Closing to provide for the resale of such shares from time to time) are available for use, the sale or possibility of sale of these shares could have the effect of increasing the volatility in Ouster PubCo’s share price or the market price of Ouster PubCo common stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.

The obligations associated with being a public company will involve significant expenses and will require significant resources and management attention, which may divert from Ouster PubCo’s business operations.

As a public company, Ouster PubCo will become subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act. The Exchange Act requires the filing of annual, quarterly and current reports with

 

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respect to a public company’s business and financial condition. The Sarbanes-Oxley Act requires, among other things, that a public company establish and maintain effective internal control over financial reporting. As a result, Ouster PubCo will incur significant legal, accounting and other expenses that Ouster did not previously incur. Ouster PubCo’s entire management team and many of its other employees will need to devote substantial time to compliance, and may not effectively or efficiently manage its transition into a public company.

These rules and regulations will result in Ouster PubCo incurring substantial legal and financial compliance costs and will make some activities more time-consuming and costly. For example, these rules and regulations will likely make it more difficult and more expensive for Ouster PubCo to obtain director and officer liability insurance, and it may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be difficult for Ouster PubCo to attract and retain qualified people to serve on its board of directors, its board committees or as executive officers.

We are currently an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and to the extent we have taken advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

We are currently an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.

Once we lose our “emerging growth company” status, we will no longer be able to take advantage of certain exemptions from reporting, and we will also be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We will incur additional expenses in connection with such compliance and our management will need to devote additional time and effort to implement and comply with such requirements.

 

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Risks Related to the Consummation of the Domestication

The Domestication may result in adverse tax consequences for holders of CLA Class A ordinary shares and warrants, including holders exercising their redemption rights with respect to the CLA Class A ordinary shares.

CLA intends for the Domestication to qualify as a reorganization within the meaning of Section 368(a)(l)(F) of the Code, i.e., an F Reorganization. If the Domestication fails to qualify as an F Reorganization, a U.S. Holder (as defined in “U.S. Federal Income Tax Considerations—I. U.S. Holders”) of CLA Class A ordinary shares or warrants generally would recognize gain or loss with respect to its CLA Class A ordinary shares or warrants in an amount equal to the difference, if any, between the fair market value of the corresponding common stock or warrants of Ouster PubCo received in the Domestication and the U.S. Holder’s adjusted tax basis in its CLA Class A ordinary shares or warrants surrendered. Because the Domestication will occur prior to the redemption of U.S. Holders that exercise redemption rights with respect to CLA Class A ordinary shares, U.S. Holders exercising such redemption rights will be subject to the potential tax consequences of the Domestication. Additionally, Non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations—II. Non-U.S. Holders”) may become subject to withholding tax on any amounts treated as dividends paid on Ouster PubCo common stock after the Domestication.

Assuming that the Domestication qualifies as an F Reorganization, subject to the PFIC rules discussed below, U.S. Holders generally will be subject to Section 367(b) of the Code. A U.S. Holder whose CLA Class A ordinary shares have a fair market value of less than $50,000 and who, on the date of the Domestication, beneficially owns (actually or constructively) less than 10% of the total combined voting power of all classes of CLA stock entitled to vote and less than 10% of the total value of all classes of CLA stock generally will not recognize any gain or loss and will not be required to include any part of CLA’s earnings in income as a result of the Domestication. A U.S. Holder whose CLA Class A ordinary shares have a fair market value of $50,000 or more and, who on the day of the Domestication, beneficially owns (actually or constructively) less than 10% of the total combined voting power of all classes of CLA stock entitled to vote and less than 10% or more of the total value of all classes of CLA stock, generally will recognize gain (but not loss) in respect of the Domestication as if such U.S. Holder exchanged its CLA Class A ordinary shares for Ouster PubCo common stock in a taxable transaction, unless such U.S. Holder elects in accordance with applicable Treasury Regulations to include in income as a deemed dividend deemed paid by CLA the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to the CLA Class A ordinary shares held directly by such U.S. Holder. A U.S. Holder who, on the day of the Domestication, beneficially owns (actually or constructively) 10% or more of the total combined voting power of all classes of CLA stock entitled to vote or 10% or more of the total value of all classes of CLA stock, generally will be required to include in income as a deemed dividend deemed paid by CLA the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to the CLA Class A ordinary shares held directly by such U.S. Holder as a result of the Domestication.

Additionally, even if the Domestication qualifies as an F Reorganization, proposed Treasury Regulations promulgated under Section 1291(f) of the Code (which have a retroactive effective date) generally require that, a U.S. person who disposes of stock of a PFIC (including for this purpose exchanging CLA warrants for newly issued Ouster PubCo warrants in the Domestication) must recognize gain equal to the excess of the fair market value of such PFIC stock over its adjusted tax basis, notwithstanding any other provision of the Code. CLA believes that it is likely classified as a PFIC for U.S. federal income tax purposes. As a result, these proposed Treasury Regulations, if finalized in their current form, would generally require a U.S. Holder of CLA Class A ordinary shares to recognize gain under the PFIC rules on the exchange of CLA Class A ordinary shares for Ouster PubCo common stock pursuant to the Domestication unless such U.S. Holder has made certain tax elections with respect to such U.S. Holder’s CLA Class A ordinary shares. In addition, the proposed Treasury Regulations provide coordinating rules with other sections of the Code, including Section 367(b), which affect the manner in which the rules under such other sections apply to transfers of PFIC stock. These proposed Treasury Regulations, if finalized in their current form, would also apply to a U.S. Holder who exchanges CLA warrants for newly issued Ouster PubCo warrants; currently, however, the elections mentioned above do not apply to CLA warrants (for discussion regarding the unclear application of the PFIC rules to CLA warrants, see “U.S. Federal Income Tax Considerations—I. U.S.

 

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Holders—A. Tax Effects of the Domestication to U.S. Holders —5. PFIC Considerations”). Any gain recognized from the application of the PFIC rules described above would be taxable income with no corresponding receipt of cash. The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on complex rules designed to offset the tax deferral to such U.S. Holder on the undistributed earnings, if any, of CLA. It is not possible to determine at this time whether, in what form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code may be adopted or how any such Treasury Regulations would apply.

Upon consummation of the Business Combination, the rights of holders of Ouster PubCo common stock arising under the DGCL as well as Proposed Organizational Documents will differ from and may be less favorable to the rights of holders of CLA Class A ordinary shares arising under the Cayman Islands Companies Law as well as our current memorandum and articles of association.

Upon consummation of the Business Combination, the rights of holders of Ouster PubCo common stock will arise under the Proposed Organizational Documents as well as the DGCL. Those new organizational documents and the DGCL contain provisions that differ in some respects from those in our current memorandum and articles of association and the Cayman Islands Companies Law and, therefore, some rights of holders of Ouster PubCo common stock could differ from the rights that holders of CLA Class A ordinary shares currently possess. For instance, while class actions are generally not available to shareholders under Cayman Islands Companies Law, such actions are generally available under the DGCL. This change could increase the likelihood that Ouster PubCo becomes involved in costly litigation, which could have a material adverse effect on Ouster PubCo.

In addition, there are differences between the new organizational documents of Ouster PubCo and the current constitutional documents of CLA. For a more detailed description of the rights of holders of Ouster PubCo common stock and how they may differ from the rights of holders of CLA Class A ordinary shares, please see “Comparison of Corporate Governance and Shareholder Rights.” The forms of the Proposed Certificate of Incorporation and the Proposed Bylaws of Ouster PubCo are attached as Annex H and Annex I, respectively, to this proxy statement/prospectus and we urge you to read them.

Delaware law and Ouster PubCo’s Proposed Organizational Documents contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

The Proposed Organizational Documents that will be in effect upon consummation of the Business Combination, and the DGCL, contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, and therefore depress the trading price of Ouster PubCo’s common stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of Ouster PubCo’s board of directors or taking other corporate actions, including effecting changes in our management. Among other things, the Proposed Organizational Documents include provisions regarding:

 

   

providing for a classified board of directors with staggered, three-year terms;

 

   

the ability of Ouster PubCo’s board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

 

   

the Ouster PubCo Proposed Certificate of Incorporation will prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

 

   

the limitation of the liability of, and the indemnification of, Ouster PubCo’s directors and officers;

 

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the ability of Ouster PubCo’s board of directors to amend the bylaws, which may allow Ouster PubCo’s board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and

 

   

advance notice procedures with which stockholders must comply to nominate candidates to Ouster PubCo’s board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in Ouster PubCo’s board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of Ouster PubCo.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in Ouster PubCo’s board of directors or management.

The provisions of the Proposed Certificate of Incorporation requiring exclusive forum in the Court of Chancery of the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.

Ouster PubCo’s Proposed Certificate of Incorporation provides that, to the fullest extent permitted by law, and unless Ouster PubCo consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) will be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on Ouster PubCo’s behalf, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or stockholder of Ouster PubCo to Ouster PubCo or Ouster PubCo’s stockholders, (iii) any action, suit or proceeding arising pursuant to any provision of the DGCL or Ouster PubCo’s Bylaws or Ouster PubCo’s Certificate of Incorporation (as each may be amended from time to time), (iv) any action, suit or proceeding as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (v) any action, suit or proceeding asserting a claim against Ouster PubCo or any current or former director, officer or stockholder governed by the internal affairs doctrine.

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain such Securities Act claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, the Proposed Certificate of Incorporation will also provide that, unless Ouster PubCo consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act; however, there is uncertainty as to whether a court would enforce such provision, and investors cannot waive compliance with federal securities laws and the rules and regulations thereunder. Notwithstanding the foregoing, the Proposed Certificate of Incorporation will provide that the exclusive forum provision will not apply to suits brought to enforce any cause of action arising under the Securities Act, any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.

These provisions may have the effect of discouraging lawsuits against Ouster PubCo’s directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against Ouster PubCo, a court could find the choice of forum provisions contained in the Proposed Certificate of Incorporation to be inapplicable or unenforceable in such action.

 

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Risks if the Domestication and the Business Combination are not Consummated

If we are not able to complete the Business Combination with Ouster by August 25, 2022 nor able to complete another business combination by such date, in each case, as such date may be further extended pursuant to the Cayman Constitutional Documents, we would cease all operations except for the purpose of winding up and we would redeem our Class A ordinary shares and liquidate the trust account, in which case our public shareholders may only receive approximately $10.00 per share and our warrants will expire worthless.

Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein. For example, the outbreak of COVID-19 continues to grow in the U.S. and, while the extent of the impact of the outbreak on CLA will depend on future developments, it could limit our ability to complete our initial business combination, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the outbreak of the COVID-19 may negatively impact Ouster PubCo’s business following the Business Combination.

If CLA is not able to complete the Business Combination with Ouster by August 25, 2022, nor able to complete another business combination by such date, in each case, as such date may be extended pursuant to the Cayman Constitutional Documents CLA will: i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account (less taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of CLA’s remaining shareholders and its board of directors, liquidate and dissolve, subject, in each case, to our obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of applicable law. In such case, our public shareholders may only receive approximately $10.00 per share and our warrants will expire worthless.

You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares and/or public warrants, potentially at a loss.

Our public shareholders will be entitled to receive funds from the trust account only upon the earliest to occur of (1) our completion of an initial business combination (including the Closing), and then only in connection with those public shares that such public shareholder properly elected to redeem, subject to certain limitations; (2) the redemption of any public shares properly submitted in connection with a shareholder vote to amend the Cayman Constitutional Documents to (A) modify the substance and timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of the public shares if we do not complete a business combination by August 25, 2022 or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity; and (3) the redemption of the public shares if we have not completed an initial business combination by August 25, 2022, subject to applicable law. In no other circumstances will a shareholder have any right or interest of any kind to or in the trust account. Holders of public warrants will not have any right to the proceeds held in the trust account with respect to the public warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares and/or public warrants, potentially at a loss.

If we have not completed our initial business combination, our public shareholders may be forced to wait until after August 25, 2022 before redemption from the trust account.

If we have not completed our initial business combination by August 25, 2022 (or if such date is further extended at a duly called extraordinary general meeting, such later date), we will distribute the aggregate amount

 

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then on deposit in the trust account (less taxes payable and up to $100,000 of interest to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease all operations except for the purposes of winding up of our affairs, as further described in this proxy statement/prospectus. Any redemption of public shareholders from the trust account shall be affected automatically by function of the Cayman Constitutional Documents prior to any voluntary winding up. If we are required to wind-up, liquidate the trust account and distribute such amount therein, pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Cayman Islands Companies Law. In that case, investors may be forced to wait beyond August 25, 2022 (or if such date is further extended at a duly called extraordinary general meeting, such later date), before the redemption proceeds of the trust account become available to them, and they receive the return of their pro rata portion of the proceeds from the trust account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions of our Cayman Constitutional Documents and only then in cases where investors have properly sought to redeem their public shares. Only upon our redemption or any liquidation will public shareholders be entitled to distributions if we have not completed our initial business combination within the required time period and do not amend certain provisions of our Cayman Constitutional Documents prior thereto.

If the net proceeds of CLA’s initial public offering not being held in the trust account are insufficient to allow us to operate through to August 25, 2022 and we are unable to obtain additional capital, we may be unable to complete our initial business combination, in which case our public shareholders may only receive $10.00 per share, and our warrants will expire worthless.

As of September 30, 2020, CLA had cash of $1,097,447 held outside the trust account, which is available for use by us to cover the costs associated with identifying a target business and negotiating a business combination and other general corporate uses. In addition, as of September 30, 2020, CLA had total current liabilities of $100,100.

The funds available to us outside of the trust account may not be sufficient to allow us to operate until August 25, 2022, assuming that our initial business combination is not completed during that time. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.

If we are required to seek additional capital, we would need to borrow funds from Sponsor, members of our management team or other third parties to operate or may be forced to liquidate. Neither the members of our management team nor any of their affiliates is under any further obligation to advance funds to CLA in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. If we are unable to obtain additional financing, we may be unable to complete our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public shareholders may only receive approximately $10.00 per share on our redemption of the public shares and the public warrants will expire worthless.

 

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EXTRAORDINARY GENERAL MEETING OF CLA

General

CLA is furnishing this proxy statement/prospectus to its shareholders as part of the solicitation of proxies by its board of directors for use at the extraordinary general meeting of CLA to be held on March 9, 2021, and at any adjournment thereof. This proxy statement/prospectus is first being furnished to CLA’s shareholders on or about February 18, 2021 in connection with the vote on the proposals described in this proxy statement/prospectus. This proxy statement/prospectus provides CLA’s shareholders with information they need to know to be able to vote or instruct their vote to be cast at the extraordinary general meeting.

Date, Time and Place

The extraordinary general meeting will be held on March 9, 2021, at 10:00 am, Eastern Time, at the offices of White & Case LLP, at 1221 Avenue of the Americas, New York, New York, 10020, or you or your proxyholder will be able to attend and vote at the extraordinary general meeting online by visiting https://www.cstproxy.com/colonnadeacquisition/sm2021 and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the extraordinary general meeting, registered shareholders and beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in the proxy statement.

Purpose of the CLA General Meeting

At the extraordinary general meeting, CLA is asking holders of its ordinary shares to consider and vote upon:

 

   

the BCA Proposal;

 

   

the Domestication Proposal;

 

   

the Organizational Documents Proposal;

 

   

the Advisory Organizational Documents Proposals;

 

   

the Stock Issuance Proposal;

 

   

the Incentive Award Plan Proposal (collectively with the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposal and the Stock Issuance Proposal, the “Condition Precedent Proposals”); and

 

   

the Adjournment Proposal.

Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal and the Advisory Organizational Documents Proposals are not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus.

Recommendation of CLA Board of Directors

CLA’s board of directors believes that the BCA Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of CLA’s shareholders and unanimously recommends that its shareholders vote “FOR” the approval of the BCA Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Organizational Documents Proposal, “FOR” the approval, on an advisory basis, of each of the separate Advisory Organizational Documents Proposals, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Award Plan Proposal and “FOR” the approval of the Adjournment Proposal, in each case, if presented to the extraordinary general meeting.

The existence of financial and personal interests of one or more of CLA’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of CLA

 

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and its shareholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, CLA’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “BCA Proposal—Interests of CLA’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

Record Date; Who is Entitled to Vote

CLA shareholders will be entitled to vote or direct votes to be cast at the extraordinary general meeting if they owned ordinary shares at the close of business on February 8, 2021, which is the “record date” for the extraordinary general meeting. Shareholders will have one vote for each ordinary share owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. CLA warrants do not have voting rights. As of the close of business on the record date, there were 25,000,000 ordinary shares issued and outstanding, of which 20,000,000 were issued and outstanding public shares.

The Sponsor and each director and each officer of CLA have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in the case of the Sponsor, subject also to the terms and conditions contemplated by the Sponsor Support Agreement, and waive their redemption rights in connection with the consummation of the Business Combination with respect to any ordinary shares held by them. The ordinary shares held by the Sponsor will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/prospectus, the Sponsor (whose members include CLA’s directors and officers) owns 20% of the issued and outstanding ordinary shares.

Quorum

A quorum of CLA shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if the holders of a majority of the issued and outstanding ordinary shares entitled to vote at the extraordinary general meeting are represented in person or by proxy. As of the record date for the extraordinary general meeting, 12,500,001 ordinary shares would be required to achieve a quorum.

Abstentions and Broker Non-Votes

Proxies that are marked “abstain” and proxies relating to “street name” shares that are returned to CLA but marked by brokers as “not voted” will be treated as shares present for purposes of determining the presence of a quorum on all matters, but they will not be treated as shares voted on the matter. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. CLA believes all the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction.

Vote Required for Approval

The approval of the BCA Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting.

The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. The Domestication Proposal is conditioned on the approval of the BCA Proposal. Therefore, if the BCA Proposal is not approved, the Domestication Proposal will have no effect, even if approved by holders of ordinary shares.

 

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The approval of the Organizational Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. The Organizational Documents Proposal is conditioned on the approval of the Domestication Proposal, and, therefore, also conditioned on approval of the BCA Proposal. Therefore, if the BCA Proposal and the Domestication Proposal are not approved, the Organizational Documents Proposal will have no effect, even if approved by holders of ordinary shares.

The approval of each of the Advisory Organizational Documents Proposals, each of which is a non-binding vote, requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. the Advisory Organizational Documents Proposals and the Adjournment Proposal are not conditioned upon any other proposal.

The approval of the Stock Issuance Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. The Stock Issuance Proposal is conditioned on approval of the BCA Proposal, the Domestication Proposal and the Organizational Documents Proposal. Therefore, if the BCA Proposal, the Domestication Proposal and the Organizational Documents Proposal are not approved, the Stock Issuance Proposal will have no effect, even if approved by holders of ordinary shares.

The approval of the Incentive Award Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. The Incentive Award Plan Proposal is conditioned on the approval of the Stock Issuance Proposal, and, therefore, also conditioned on approval of the BCA Proposal, the Domestication Proposal and the Organizational Documents Proposal. Therefore, if the BCA Proposal, the Domestication Proposal, the Organizational Documents Proposal and the Stock Issuance Proposal are not approved, the Incentive Award Plan Proposal will have no effect, even if approved by holders of ordinary shares.

The approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. The Adjournment Proposal and the Advisory Organizational Documents Proposals are not conditioned upon any other proposal.

Voting Your Shares

Each CLA ordinary share that you own in your name entitles you to one vote. Your proxy card shows the number of ordinary shares that you own. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

There are two ways to vote your ordinary shares at the extraordinary general meeting:

 

   

You Can Vote By Signing and Returning the Enclosed Proxy Card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by CLA’s board “FOR” the approval of the BCA Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Organizational Documents Proposal, “FOR” the approval, on an advisory basis, of each of the separate Advisory Organizational Documents Proposals, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Award Plan Proposal and “FOR” the approval of the Adjournment Proposal, in each case, if presented to the extraordinary general meeting. Votes received after a matter has been voted upon at the extraordinary general meeting will not be counted.

 

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You Can Attend the General Meeting and Vote in Person.

 

   

If your shares are registered in your name with Continental Stock Transfer & Trust Company and you wish to attend the extraordinary general meeting, go to https://www.cstproxy.com/colonnadeacquisition/sm2021, enter the 12-digit control number included on your proxy card or notice of the extraordinary general meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the extraordinary general meeting you will need to log back into the extraordinary general meeting site using your control number. Pre-registration is recommended but is not required in order to attend.

 

   

Beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the extraordinary general meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial shareholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the extraordinary general meeting. After contacting Continental Stock Transfer & Trust Company, a beneficial holder will receive an e-mail prior to the extraordinary general meeting with a link and instructions for entering the extraordinary general meeting. Beneficial shareholders should contact Continental Stock Transfer & Trust Company at least five (5) business days prior to the extraordinary general meeting date in order to ensure access.

Revoking Your Proxy

If you are a CLA shareholder and you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

 

   

you may send another proxy card with a later date;

 

   

you may notify Joseph Sambuco, Chairman of CLA, in writing before the extraordinary general meeting that you have revoked your proxy; or

 

   

you may attend the extraordinary general meeting, revoke your proxy, and vote, as indicated above.

Who Can Answer Your Questions About Voting Your Shares

If you are a shareholder and have any questions about how to vote or direct a vote in respect of your ordinary shares, you may call Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call at (203) 658-9400, or by emailing CLA.info@investor.morrowsodali.com.

Redemption Rights

Pursuant to the Cayman Constitutional Documents, a public shareholder may request of CLA that Ouster PubCo redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a holder of public shares, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

   

(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares;

 

   

submit a written request to Continental, CLA’s transfer agent, that Ouster PubCo redeem all or a portion of your public shares for cash; and

 

   

deliver the certificates for your public shares (if any) along with the redemption forms to Continental, physically or electronically through DTC.

 

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Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 pm, Eastern Time, on March 5, 2021 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

Therefore, the election to exercise redemption rights occurs prior to the Domestication and the redemption is with respect to the Ouster PubCo public shares that an electing public shareholder holds after the Domestication. For the purposes of the Cayman Constitutional Documents, the exercise of redemption rights shall be treated as an election to have such public shares redeemed for cash and references in this proxy statement/prospectus to “redemption” or “redeeming” shall be interpreted accordingly. Immediately following the Domestication and the consummation of the Business Combination, Ouster PubCo shall satisfy the exercise of redemption rights by redeeming the corresponding public shares issued to the public shareholders that validly exercised their redemption rights.

Holders of units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact Continental, CLA’s transfer agent, directly and instruct them to do so. Public shareholders may elect to redeem all or a portion of the public shares held by them, regardless of if or how they vote in respect of the BCA Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers the certificates for its shares (if any) along with the redemption forms to Continental, Ouster PubCo will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account, calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of September 30, 2020, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and, accordingly, it is shares of Ouster PubCo common stock that will be redeemed immediately after consummation of the Business Combination.

If you hold the shares in “street name,” you will have to coordinate with your broker to have your shares certificated or delivered electronically. Ouster PubCo public shares that have not been tendered (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through DTC’s DWAC (deposit withdrawal at custodian) system. The transfer agent will typically charge the tendering broker $80 and it would be up to the broker whether or not to pass this cost on to the redeeming shareholder. In the event the proposed Business Combination is not consummated this may result in an additional cost to shareholders for the return of their shares.

A CLA shareholder may not withdraw a redemption request once submitted to CLA unless CLA’s board of directors determines (in their sole discretion) to permit the withdrawal of such redemption request (which they may do in whole or in part). Furthermore, if a holder of a public share delivers its certificate (if any) along with the redemption forms in connection with an election of its redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that CLA permit the withdrawal of the redemption request and instruct Continental to return the certificate (physically or electronically). The holder can make such request by contacting Continental at the address or email address listed in this proxy statement/prospectus.

Any corrected or changed written exercise of redemption rights must be received by Continental prior to the vote taken on the BCA Proposal at the extraordinary general meeting. No request for redemption will be honored unless the holder’s public shares have been delivered (either physically or electronically) to Continental at least two business days prior to the vote at the extraordinary general meeting.

 

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Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

The Sponsor and each director and each officer of CLA have agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in the case of the Sponsor, subject also to the terms and conditions contemplated by the Sponsor Support Agreement, and waive their redemption rights in connection with the consummation of the Business Combination with respect to any ordinary shares held by them. The ordinary shares held by the Sponsor will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/prospectus, the Sponsor (whose members include CLA’s directors and officers) owns 20% of the issued and outstanding ordinary shares.

Holders of the warrants will not have redemption rights with respect to the warrants.

The closing price of public shares on February 9, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus, was $15.31. As of September 30, 2020, funds in the trust account totaled $200,001,752 and were comprised entirely of U.S. government treasury obligations with a maturity of 185 days or less or of money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations, or approximately $10.00 per issued and outstanding public share.

Prior to exercising redemption rights, public shareholders should verify the market price of the public shares as they may receive higher proceeds from the sale of their public shares in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. CLA cannot assure its shareholders that they will be able to sell their public shares in the open market, even if the market price per share is higher than the redemption price, as there may not be sufficient liquidity in its securities when its shareholders wish to sell their shares.

Appraisal Rights

Neither CLA’s shareholders nor CLA’s warrant holders have appraisal rights in connection with the Business Combination or the Domestication under Cayman Islands law or under the DGCL.

CLA Initial Shareholders

As of the date of this proxy statement/prospectus, there are 25,000,000 ordinary shares issued and outstanding, which includes the 5,000,000 founder shares held by the Sponsor (whose members include CLA directors and officers) and the 20,000,000 public shares. As of the date of this proxy statement/prospectus, there is outstanding an aggregate of 16,000,000 warrants, which includes the 6,000,000 private placement warrants held by the Sponsor and the 10,000,000 public warrants.

At any time at or prior to the Business Combination, subject to applicable securities laws (including with respect to material non-public information), the Sponsor, the existing stockholders of Ouster or CLA or their respective directors, officers, advisors or respective affiliates may (i) purchase public shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or elect to redeem, or indicate an intention to redeem, public shares, (ii) execute agreements to purchase such shares from such investors in the future, or (iii) enter into transactions with such investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of the Condition Precedent Proposals or not redeem their public shares. Such a purchase may include a contractual acknowledgement that

 

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such shareholder, although still the record holder of CLA’s shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, the existing stockholders of Ouster or CLA or their respective directors, officers, advisors, or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of (1) satisfaction of the requirement that holders of a majority of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the BCA Proposal, the Stock Issuance Proposal, Incentive Award Plan Proposal and the Adjournment Proposal, (2) satisfaction of the requirement that holders of a majority of at least two-thirds of the ordinary shares, represented in person or by proxy and entitled to vote at the extraordinary general meeting, vote in favor of the Domestication Proposal, the Organizational Documents Proposal and the Advisory Organizational Documents Proposal, (3) satisfaction of the Minimum Cash Condition, (4) otherwise limiting the number of public shares electing to redeem and (5) CLA’s net tangible assets being at least $5,000,001. Entering into any such arrangements may have a depressive effect on the ordinary shares (e.g., by giving an investor or holder the ability to effectively purchase shares at a price lower than market, such investor or holder may therefore become more likely to sell the shares he or she owns, either at or prior to the Business Combination).

If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved.

 

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BCA PROPOSAL

CLA is asking its shareholders to approve by ordinary resolution and adopt the Merger Agreement. CLA shareholders should read carefully this proxy statement/prospectus in its entirety for more detailed information concerning the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. Please see the subsection entitled “The Merger Agreement” below for additional information and a summary of certain terms of the Merger Agreement. You are urged to read carefully the Merger Agreement in its entirety before voting on this proposal.

Because CLA is holding a shareholder vote on the Merger, CLA may consummate the Merger only if it is approved by the affirmative vote of the holders of a majority of ordinary shares that are voted at the extraordinary general meeting.

The Merger Agreement

This subsection of the proxy statement/prospectus describes the material provisions of the Merger Agreement, but does not purport to describe all of the terms of the Merger Agreement. The following summary is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. You are urged to read the Merger Agreement in its entirety because it is the primary legal document that governs the Merger.

The Merger Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Merger Agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Merger Agreement. The representations, warranties and covenants in the Merger Agreement are also modified in part by the underlying disclosure letters (the “disclosure letters”), which are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to shareholders and were used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that the disclosure letters contain information that is material to an investment decision. Additionally, the representations and warranties of the parties to the Merger Agreement may or may not have been accurate as of any specific date and do not purport to be accurate as of the date of this proxy statement/prospectus. Accordingly, no person should rely on the representations and warranties in the Merger Agreement or the summaries thereof in this proxy statement/prospectus as characterizations of the actual state of facts about CLA, Ouster or any other matter.

Structure of the Merger

On December 21, 2020, CLA entered into the Merger Agreement with Merger Sub and Ouster, pursuant to which, among other things, following the Domestication, (i) Merger Sub will merge with and into Ouster, the separate corporate existence of Merger Sub will cease and Ouster will be the surviving corporation and a wholly owned subsidiary of CLA and (ii) CLA will change its name to Ouster, Inc.

Prior to and as a condition of the Merger, pursuant to the Domestication, CLA will change its jurisdiction of incorporation by effecting a deregistration under the Cayman Islands Companies Law and a domestication under Section 388 of the DGCL, pursuant to which CLA’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. For more information, see “The Domestication Proposal.”

Immediately prior to the effective time of the Merger, all of the outstanding warrants to purchase shares of Ouster common stock and Ouster Preferred Stock (together, the “Ouster Capital Stock”) will be exercised in full or terminated in accordance with their respective terms (the “Ouster Warrant Settlement”).

 

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Consideration

Aggregate Merger Consideration

As a result of and upon the Closing, among other things, all outstanding shares of Ouster Capital Stock (after giving effect to the Ouster Warrant Settlement) as of immediately prior to the effective time of the Merger, and, together with shares of Ouster Capital Stock reserved in respect of Ouster Awards outstanding as of immediately prior to the Closing that will be converted into awards based on Ouster PubCo common stock, as discussed in the following section, will be cancelled in exchange for the right to receive an aggregate of 150,000,000 of Ouster PubCo common stock (at a deemed value of $10.00 per share), which, in the case of Ouster Awards, will be shares underlying awards based on Ouster PubCo common stock representing a fully-diluted pre-transaction equity value of Ouster of $1.5 billion. The portion of the Aggregate Merger Consideration reflecting the conversion of the Ouster Awards is calculated assuming that all Ouster PubCo Options are net-settled (although Ouster PubCo Options may by their terms be cash-settled, resulting in additional dilution). An additional 10,000,000 shares of Ouster PubCo common stock will be purchased (at a price of $10.00 per share) at the Closing by the PIPE Investors for a total aggregate purchase price of up to $100,000,000. The proceeds of the PIPE Investment, together with the amounts remaining in CLA’s trust account as of immediately following the effective time of the Merger, will be retained by Ouster PubCo following the Closing. For additional information on the Merger Agreement, see “BCA Proposal—The Merger Agreement.”

Treatment of Ouster Options and Restricted Stock

As a result of and upon the Closing, among other things, all (i) Ouster Options and (ii) Ouster Restricted Stock Awards outstanding as of immediately prior to the Merger will be converted into (a) Ouster PubCo Options and (b) Ouster PubCo Restricted Stock, respectively. The portion of the Aggregate Merger Consideration reserved for the conversion of the Ouster Awards is counted using the treasury stock method.

Subject to the terms of the Merger Agreement, each Ouster PubCo Option will relate to the number of whole shares of Ouster PubCo common stock (rounded down to the nearest whole share) equal to (i) the number of shares of Ouster common stock subject to the applicable Ouster Option multiplied by (ii) the Exchange Ratio. The exercise price for each Ouster PubCo Option will equal (i) the exercise price of the applicable Ouster Option divided by (ii) the Exchange Ratio. Subject to the terms of the Merger Agreement, each share of Ouster PubCo Restricted Stock will relate to the number of whole shares of Ouster PubCo common stock (rounded down to the nearest whole share) equal to (i) the number of shares of Ouster common stock subject to the applicable Ouster Restricted Stock multiplied by (ii) the Exchange Ratio.

Immediately prior to the Closing, the board of directors of Ouster shall amend the Ouster, Inc. Amended and Restated 2015 Stock Plan (the “2015 Stock Plan”) and take all other necessary actions, effective as of immediately prior to the Closing, in order to (i) cancel the remaining unallocated share reserve under the 2015 Stock Plan and provide that shares in respect of Ouster Awards that for any reason become re-eligible for future issuance, shall be cancelled, (ii) provide that no new Ouster Awards will be granted under the 2015 Stock Plan, and (iii) provide that no Ouster Option (including as converted to an Ouster PubCo Option) shall be subject to the Option Exchange Program, as defined therein.

Closing

In accordance with the terms and subject to the conditions of the Merger Agreement, the Closing will take place at 10:00 a.m., Eastern Time, on the date that is the second business day after the satisfaction or waiver of the conditions set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions), unless another time or date is mutually agreed to in writing by the parties.

 

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Representations and Warranties

The Merger Agreement contains representations and warranties of CLA, Merger Sub and Ouster, certain of which are qualified by materiality and material adverse effect (as defined below) and may be further modified and limited by the disclosure letters. See “—Material Adverse Effect” below. The representations and warranties of CLA are also qualified by information included in CLA’s public filings, filed or submitted to the SEC on or prior to the date of the Merger Agreement (subject to certain exceptions contemplated by the Merger Agreement).

Representations and Warranties of Ouster

Ouster has made representations and warranties relating to, among other things, company organization, subsidiaries, due authorization, no conflict, governmental authorities and consents, capitalization of Ouster and its subsidiaries, financial statements, undisclosed liabilities, litigation and proceedings, legal compliance, contracts and no defaults, Ouster benefit plans, employment and labor relations, taxes, brokers’ fees, insurance, licenses, tangible personal property, real property, intellectual property, privacy and cybersecurity, environmental matters, absence of changes, anti-corruption compliance, sanctions and international trade compliance, information supplied, customers and vendors, government contracts and sufficiency of assets.

The representations and warranties of Ouster identified as fundamental under the terms of the Merger Agreement are those made pursuant to: the first and second sentences of Section 4.1 of the Merger Agreement (Company Organization), the first and second sentences of Section 4.2 of the Merger Agreement (Subsidiaries), Section 4.3 of the Merger Agreement (Due Authorization), Section 4.6 of the Merger Agreement (Capitalization of Ouster), Section 4.7 of the Merger Agreement (Capitalization of Subsidiaries) and Section 4.16 of the Merger Agreement (Brokers Fees) (collectively, the “Ouster Fundamental Representations”).

Representations and Warranties of CLA and Merger Sub

CLA and Merger Sub have made representations and warranties relating to, among other things, company organization, due authorization, no conflict, litigation and proceedings, SEC filings, internal controls, listing, financial statements, governmental authorities and consents, trust account, Investment Company Act and JOBS Act, absence of changes, no undisclosed liabilities, capitalization, brokers’ fees, indebtedness, taxes, business activities, the NYSE stock market quotation, registration statement and proxy statement and proxy/registration statement, no outside reliance and no additional representations or warranties.

Survival of Representations and Warranties

Except in the case of claims against a person in respect of such person’s actual fraud, the representations and warranties of the respective parties to the Merger Agreement generally will not survive the Closing.

Material Adverse Effect

Under the Merger Agreement, certain representations and warranties of Ouster are qualified in whole or in part by a material adverse effect standard for purposes of determining whether a breach of such representations and warranties has occurred. Under the Merger Agreement, certain representations and warranties of CLA are qualified in whole or in part by a material adverse effect on the ability of CLA to enter into and perform its obligations under the Merger Agreement standard for purposes of determining whether a breach of such representations and warranties has occurred.

Pursuant to the Merger Agreement, a material adverse effect with respect to Ouster (“Ouster Material Adverse Effect”) means any event, state of facts, condition, change, development, circumstance, occurrence or effect (collectively, “Events”) that (i) has had, or would reasonably be expected to have, individually or in the

 

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aggregate, a material adverse effect on the business, assets, results of operations or financial condition of Ouster and its subsidiaries, taken as a whole or (ii) does or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the ability of Ouster to consummate the Merger.

However, in no event would any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, an “Ouster Material Adverse Effect”:

 

  (a)

any change in applicable laws or GAAP or any interpretation thereof following the date of the Merger Agreement;

 

  (b)

any change in interest rates or economic, political, business or financial market conditions generally;

 

  (c)

the taking of any action required by the Merger Agreement;

 

  (d)

any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar occurrences), pandemic (including COVID-19, or any COVID-19 Measures or any change in such COVID-19 Measures or interpretations following the date of this Agreement) or change in climate;

 

  (e)

any acts of terrorism or war, the outbreak or escalation of hostilities, geopolitical conditions, local, national or international political conditions;

 

  (f)

any failure of Ouster to meet any projections or forecasts (provided that this clause will not prevent a determination that any Event not otherwise excluded from this definition of Ouster Material Adverse Effect underlying such failure to meet projections or forecasts has resulted in a Ouster Material Adverse Effect);

 

  (g)

any Events generally applicable to the industries or markets in which Ouster and its subsidiaries operate (including increases in the cost of products, supplies, materials or other goods purchased from third party suppliers);

 

  (h)

the announcement of the Merger Agreement and consummation of the transactions contemplated hereby, including any termination of, reduction in or similar adverse impact (but in each case only to the extent attributable to such announcement or consummation) on relationships, contractual or otherwise, with any landlords, customers, suppliers, distributors, partners or employees of Ouster and its subsidiaries (it being understood that this clause will be disregarded for purposes of the representation and warranties in Section 4.4 of the Merger Agreement and the corresponding condition to Closing);

 

  (i)

any matter set forth on the Ouster Disclosure Letter;

 

  (j)

any Events to the extent actually known by certain individuals identified in CLA’s disclosure letter on or prior to the date of the Merger Agreement; or

 

  (k)

any action taken by, or at the request of, CLA or Merger Sub.

Any Event referred to in clauses (a), (b), (d), (e) or (g) above may be taken into account in determining if an Ouster Material Adverse Effect has occurred to the extent it has a disproportionate and adverse effect on the business, assets, results of operations or condition (financial or otherwise) of Ouster and its subsidiaries, taken as a whole, relative to similarly situated companies in the industry in which Ouster and its subsidiaries conduct their respective operations, but only to the extent of the incremental disproportionate effect on Ouster and its subsidiaries, taken as a whole, relative to similarly situated companies in the industry in which Ouster and its subsidiaries conduct their respective operations.

Covenants and Agreements

Ouster has made covenants relating to, among other things, conduct of business, inspection, preparation and delivery of certain audited and unaudited financial statements, affiliate agreements and acquisition proposals.

 

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CLA has made covenants relating to, among other things, employee matters, trust account proceeds and related available equity, the NYSE listing, no solicitation by CLA, CLA’s conduct of business, post-closing directors and officers, domestication, indemnification and insurance, CLA public filings, PIPE Investment subscriptions and stockholder litigation.

Conduct of Business by Ouster

Ouster has agreed that from the date of the Merger Agreement through the earlier of the Closing or the termination of the Merger Agreement (the “Interim Period”), it will, and will cause its subsidiaries to, except as otherwise explicitly contemplated by the Merger Agreement or the Ancillary Agreements (as defined below), as consented to by CLA in writing (which consent will not be unreasonably conditioned, withheld, delayed or denied) or as required by applicable law, use reasonable best efforts to operate the business of Ouster in the ordinary course consistent with past practices.

During the Interim Period, Ouster has also agreed not to, and to cause its subsidiaries not to, except as otherwise contemplated by the Merger Agreement, including the Ouster disclosure letter thereto (the “Ouster Disclosure Letter”), the Ancillary Agreements, or as consented to by CLA in writing (which consent will not be unreasonably conditioned, withheld, delayed or denied) or as required by applicable law:

 

   

change or amend the governing documents of Ouster;

 

   

make or declare any dividend or distribution to stockholders of Ouster or make any other distributions in respect of any of Ouster Capital Stock or equity interests;

 

   

split, combine, reclassify, recapitalize or otherwise amend any terms of any shares or series of Ouster Capital Stock or equity interests in a manner that would increase the Aggregate Merger Consideration payable to the stockholders of Ouster;

 

   

purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of Ouster Capital Stock or membership interests or other equity interests of Ouster, except for (i) the acquisition by Ouster of any shares of Ouster Capital Stock or membership interests or other equity interests of Ouster or of any Ouster Awards in connection with the repurchase, forfeiture or cancellation of such interests and Ouster Awards, (ii) the acquisition by Ouster of shares of Ouster common stock in connection with the surrender of shares of Ouster common stock by holders of Ouster Options in order to pay the exercise price of the Ouster Options, and (iii) the withholding of shares of Ouster Common stock to satisfy tax obligations with respect to the Ouster Awards;

 

   

enter into, modify in any material respect or terminate (other than expiration in accordance with its terms) any material contracts or any real property lease, other than in the ordinary course of business or as required by law;

 

   

sell, assign, transfer, license, sublicense, convey, lease, covenant not to assert, pledge or otherwise encumber or subject to any lien, abandon, cancel, let lapse or otherwise dispose of any material tangible assets or properties of Ouster or its subsidiaries, except for (i) the sale of inventory in the ordinary course of business consistent with past practice, (ii) dispositions of obsolete or worthless equipment, (iii) transactions among Ouster and its subsidiaries or among its subsidiaries and (iv) transactions in the ordinary course of business;

 

   

acquire any ownership interest in any real property;

 

   

except as required by law, an existing benefit plan, or certain contractual obligations, (i) grant any severance, retention, change in control or termination or similar pay, except in connection with the promotion, hiring or termination of employment of any employee in the ordinary course of business, (ii) terminate, adopt, enter into or materially amend or grant any new awards under any existing benefit plan or any plan, policy, practice, program, agreement or other arrangement that would be deemed a benefit plan as of the date of the Merger Agreement, except in connection with the promotion or hiring

 

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of any employee in the ordinary course of business, (iii) increase the cash compensation or bonus opportunity of any employee, officer, director or other individual service provider, except such increases to any such individuals who are not directors or officers of Ouster or its subsidiaries in the ordinary course of business consistent with past practice, (iv) take any action to amend or waive any performance or vesting criteria or to accelerate the time of payment of vesting of any compensation or benefit payable by Ouster or any of Ouster’s subsidiaries, (v) hire or engage any new employee or independent contractor if such new employee or independent contractor will receive annual base compensation in excess of $250,000, other than in the ordinary course of business consistent with past practice or (vi) terminate the employment or engagement, other than for cause, death, or disability, of any employee or independent contractor with an annual base compensation in excess of $250,000;

 

   

acquire by merger or consolidation with, or merge or consolidate with, or purchase substantially all or a material portion of the assets of, any corporation, partnership, association, joint venture or other business organization or division thereof;

 

   

incur or assume any indebtedness for borrowed money, except under that certain Loan and Security Agreement, dated as of November 27, 2018, by and between Ouster and Silicon Valley Bank, as amended from time to time (or any amendment, replacement or refinancing thereof), in the ordinary course of business;

 

   

(i) make or change any material election in respect of taxes, (ii) amend, modify or otherwise change any filed material tax return, (iii) adopt or request permission of any taxing authority to change any accounting method in respect of material taxes, (iv) enter into any closing agreement in respect of material taxes executed on or prior to the Closing Date or enter into any tax sharing or similar agreement (other than customary commercial contracts entered into in the ordinary course of business not primarily related to taxes), (v) settle any claim or assessment in respect of material taxes, (vi) surrender or allow to expire any right to claim a refund of material taxes, (vii) file any tax return in a manner that is materially inconsistent with the past practices of Ouster and its subsidiaries or (viii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material taxes or in respect to any material tax attribute that would give rise to any claim or assessment of taxes, in each case with respect to items (i) through (viii), to the extent such action would be expected to have a material and adverse impact on CLA or its affiliates;

 

   

knowingly take or fail to take any action, where such action or failure to act could reasonably be expected to prevent the Merger from qualifying for the intended tax treatment (as defined in the Merger Agreement);

 

   

authorize for issuance, issue, sell, transfer, encumber, dispose or deliver any additional shares of Ouster Capital Stock or securities exercisable for or convertible into Ouster Capital Stock or grant any additional equity or equity-based compensation (including Ouster Restricted Stock) other than (i) upon the exercise or settlement of Ouster Options under the 2015 Stock Plan and applicable award agreement outstanding on the date of the Merger Agreement in accordance with their terms as in effect as of the date of the Merger Agreement, and (ii) as required to comply with any Ouster benefit plan as in effect on the date of the Merger Agreement;

 

   

adopt a plan of, or otherwise enter into or effect a, complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Ouster or its subsidiaries (other than the Merger);

 

   

waive, release, settle, compromise or otherwise resolve any inquiry, investigation, claim, action, litigation or other legal proceedings, except in the ordinary course of business or where such waivers, releases, settlements or compromises are covered by insurance or involve only the payment of monetary damages in an amount less than $250,000 in the aggregate;

 

   

(A) sell, assign, transfer, license, sublicense, covenant not to assert, pledge, encumber, subject to a lien (other than a permitted lien), or grant to, or agree to grant to, any Person rights in or to any Ouster

 

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intellectual property that is material to Ouster and its subsidiaries (other than non-exclusive licenses of Ouster intellectual property granted to customers or distributors in the ordinary course of business consistent with past practice), or dispose of, cancel, abandon or permit to lapse any rights to any intellectual property that is material to Ouster and its subsidiaries except for the expiration of Ouster Registered Intellectual Property (as defined in the Merger Agreement) in accordance with the applicable statutory term (or in the case of immaterial domain names, applicable registration period) or (B) subject any material Ouster intellectual property to any Copyleft Licenses (as defined in the Merger Agreement);

 

   

disclose or agree to disclose to any Person (other than CLA or any of its representatives) any trade secret or any other material confidential or proprietary information, know-how or process of Ouster or any of its subsidiaries other than in the ordinary course of business consistent with past practice and pursuant to obligations to maintain the confidentiality thereof;

 

   

make or commit to make capital expenditures other than in an amount not in excess of the amount set forth on Section 6.1(r) of the Ouster Disclosure Letter, in the aggregate;

 

   

manage Ouster’s and its subsidiaries’ working capital in a manner other than in the ordinary course of business consistent with past practice;

 

   

enter into or extend any collective bargaining agreement or similar labor agreement (other than as required by applicable law), or recognize or certify any labor union, labor organization, or group of employees of Ouster or its subsidiaries as the bargaining representative for any employees of Ouster or its subsidiaries;

 

   

terminate without replacement or fail to use reasonable efforts to maintain any license that is material to the conduct of the business of Ouster and its subsidiaries, taken as a whole;

 

   

(i) limit the right of Ouster or any of Ouster’s subsidiaries to engage in any line of business or in any geographic area, to develop, market or sell products or services, or to compete with any Person or (ii) grant any exclusive or similar rights to any Person, in each case, except where such limitation or grant does not, and would not be reasonably likely to, individually or in the aggregate, materially and adversely affect, or materially disrupt, the ordinary course operation of the businesses of Ouster and its subsidiaries, taken as a whole;

 

   

terminate without replacement or amend in a manner materially detrimental to Ouster and its subsidiaries, taken as a whole, any material insurance policy insuring the business of Ouster or any of Ouster’s subsidiaries;

 

   

cease conducting, or enter into any new line of business outside of the business currently conducted by Ouster and its subsidiaries as of the date of the Merger Agreement;

 

   

make any material change in financial accounting methods, principles or practices, except insofar as may have been required by a change in GAAP or applicable law; or

 

   

enter into any agreement to take any of the above actions prohibited under the Merger Agreement.

Conduct of Business of CLA

CLA has agreed that from the date of the Merger Agreement through the earlier of the Closing or the termination of the Merger Agreement, it will, and will cause Merger Sub to, except as otherwise explicitly contemplated by the Merger Agreement (including as contemplated by the PIPE Investment), in connection with the Domestication or as consented to by Ouster in writing (which consent will not be unreasonably conditioned, withheld, delayed or denied), operate its business in the ordinary course and consistent with past practice.

During the Interim Period, CLA has also agreed not to, and to cause Merger Sub not to, except as otherwise contemplated by the Merger Agreement (including as contemplated by the PIPE Investment or in connection

 

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with the Domestication) or the Ancillary Agreements (as defined below), as consented to by Ouster in writing (which consent will not be unreasonably conditioned, withheld, delayed or denied) or as required by applicable law:

 

   

seek any approval from CLA’s shareholders to change, modify or amend the Trust Agreement or the governing documents of CLA or Merger Sub, except as otherwise contemplated by the Condition Precedent Proposals;

 

   

(x) make or declare any dividend or distribution to the shareholders of CLA or make any other distributions in respect of any of CLA’s or Merger Sub’s Capital Stock (as defined in the Merger Agreement), share capital or equity interests, (y) split, combine, reclassify or otherwise amend any terms of any shares or series of CLA’s or Merger Sub’s Capital Stock or equity interests, or (z) purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital stock, share capital or membership interests, warrants or other equity interests of CLA or Merger Sub, other than a redemption of shares of CLA Class A ordinary shares effected in connection with the Merger;

 

   

take certain actions with respect to tax related matters, including, among others, make or change any material election in respect of taxes, amend, modify or otherwise change any filed material tax return and related activities, file any tax return in a manner inconsistent with the past practices of CLA and Merger Sub or enter into any closing agreement, tax sharing or similar agreement in respect of material taxes;

 

   

knowingly take or knowingly fail to take any action, where such action or failure to act could reasonably be expected to prevent the Merger from qualifying for the intended tax treatment;

 

   

other than as expressly required by the Sponsor Support Agreement, enter into, renew or amend in any material respect, any transaction or contract with an affiliate of CLA or Merger Sub;

 

   

incur or assume any indebtedness or guarantee any indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Ouster or any of Ouster’s subsidiaries or guaranty any debt security of another person, other than (i) any indebtedness for borrowed money or guarantee incurred in the ordinary course of business consistent with past practice and in an aggregate amount not to exceed $100,000 or (ii) incurred between CLA and Merger Sub;

 

   

incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any indebtedness or otherwise knowingly and purposefully incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any other material liabilities, debts or obligations other than in support of the transactions contemplated by the Merger Agreement and the Ancillary Agreements (as defined below) or in support of the ordinary course operations of CLA;

 

   

(i) issue any securities of CLA or securities exercisable for or convertible into securities of CLA, other than the issuance of the Aggregate Merger Consideration, (ii) grant any options, warrants or other equity-based awards with respect to securities of CLA not outstanding on the date of the Merger Agreement or (iii) amend, modify or waive any of the material terms or rights set forth in any CLA warrant or the Warrant Agreement, including any amendment, modification or reduction of the warrant price set forth therein; or

 

   

enter into any agreement to do any of the above actions prohibited under the Merger Agreement.

Covenants of CLA

Pursuant to the Merger Agreement, CLA has agreed, among other things, to:

 

   

prior to the Closing Date, obtain approval for and adopt the 2021 Plan, the Stock Option Agreement and the Restricted Stock Unit Agreement, in each case, effective as of the Closing Date;

 

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within two business days following the expiration of the sixty-day period after CLA has filed current Form 10 information with the SEC, file an effective registration statement on Form S-8 (or other applicable form, including Form S-3) with respect to Ouster PubCo’s common stock issuable under the 2021 Plan and use reasonable efforts to maintain the effectiveness of such registration statement(s) (and the current status of the prospectus or prospectuses contained therein) for so long as awards granted thereunder remain outstanding;

 

   

take certain actions so that the cash available in the trust account will be released from the trust account and so that the trust account will terminate thereafter, in each case, pursuant to the terms and subject to the terms and conditions of the Trust Agreement;

 

   

during the Interim Period, ensure CLA remains listed as a public company on the NYSE;

 

   

during the Interim Period, not, and cause its subsidiaries not to, and instruct its and their representatives not to, initiate any negotiations or enter into any agreements for certain alternative transactions and to terminate any such negotiations ongoing as of the date of the Merger Agreement;

 

   

subject to the terms of CLA’s governing documents, take all such action within its power as may be necessary or appropriate such that immediately following the effective time of the Merger:

 

   

the Board of Directors of Ouster PubCo shall consist of up to seven directors, which shall initially be comprised of (i) one Class II (as defined in the certificate of incorporation of CLA upon Domestication) director reasonably satisfactory to Ouster designated by CLA and (ii) up to six directors designated by Ouster PubCo;

 

   

the Board of Directors of Ouster PubCo shall have a majority of “independent” directors for the purposes of the NYSE rules, as applicable, each of whom shall serve in such capacity in accordance with the terms of the governing documents of Ouster PubCo following the effective time of the Merger; and

 

   

the initial officers of CLA will be as set forth in the Ouster Disclosure Letter (as may be updated by Ouster prior to Closing following written notice to CLA), who will serve in such capacity in accordance with the terms of the governing documents of Ouster PubCo following the effective time of the Merger;

 

   

subject to approval of CLA’s shareholders, cause the Domestication to become effective at least one day prior to the effective time of the Merger (see “Domestication Proposal”);

 

   

after the effective time of the Merger, indemnify and hold harmless each present and former director and officer of Ouster and CLA and each of their respective subsidiaries against any costs, expenses, damages or liabilities incurred in connection with any legal proceeding, to the fullest extent that would have been permitted under applicable law and the applicable governing documents to indemnify such person;

 

   

maintain, and cause its subsidiaries to maintain for a period of not less than six years from the effective time of the Merger (i) provisions in its governing documents and those of its subsidiaries concerning the indemnification and exoneration of CLA and its subsidiaries’ former and current officers, directors and employees and agents, no less favorable than as contemplated by the applicable governing documents of Ouster immediately prior to the effective time of the Merger and (ii) a directors’ and officers’ liability insurance policy covering those persons who are currently covered by CLA’s, Ouster’s or their respective subsidiaries’ directors’ and officers’ liability insurance policies on terms not less favorable than the terms of such current insurance coverage, except that in no event will CLA be required to pay an annual premium for such insurance in excess of 300% of the aggregate annual premium payable by CLA or Ouster, as applicable, for such insurance policy for the year ended December 31, 2020;

 

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on the Closing Date, enter into customary indemnification agreements reasonably satisfactory to each of Ouster and CLA with the post-Closing directors and officers of Ouster PubCo, which indemnification agreements will continue to be effective following the Closing;

 

   

from the date of the Merger Agreement through the effective time of the Merger, keep current and timely file all reports required to be filed or furnished with the SEC and otherwise comply in all material respects with its reporting obligations under applicable law;

 

   

except as otherwise approved by Ouster, not permit any amendment or modification to be made to, any waiver (in whole or in part) of, or provide consent to modify (including consent to terminate), any provision or remedy under, or any replacements of, any of the PIPE Subscription Agreements;

 

   

use its reasonable best efforts to take, or to cause to be taken, all actions required, necessary or that it deems to be proper or advisable to consummate the transaction contemplated by the PIPE Subscription Agreements on the terms described therein, including using its reasonable best efforts to enforce its rights under the PIPE Subscription Agreements to cause the PIPE Investors to pay to (or as directed by) CLA the applicable purchase price under each PIPE Investor’s applicable Subscription Agreement in accordance with its terms; and

 

   

prior to the Closing Date, promptly notify and keep Ouster reasonably informed of the status of any litigation brought or, to CLA’s knowledge, threatened in writing against CLA or its board of directors by any of CLA’s stockholders in connection with the Merger Agreement, any Ancillary Agreement or the transactions contemplated therein, and will provide Ouster with the opportunity to participate in the defense of such litigation and will not settle or agree to settle any such litigation without the prior written consent of Ouster (such consent not to be unreasonably withheld, conditioned or delayed).

Covenants of Ouster

Pursuant to the Merger Agreement, Ouster has agreed, among other things, to:

 

   

subject to confidentiality obligations that may be applicable to information furnished to Ouster or any of its subsidiaries by third parties and except for any information that is subject to attorney-client privilege, and to the extent permitted by applicable law, afford CLA and its accountants, counsel and other representatives reasonable access during the Interim Period to their properties, books, contracts, commitments, tax returns, records and appropriate officers and employees and furnish such representatives with all financial and operating data and other information concerning the affairs of Ouster and its subsidiaries that are in the possession of Ouster or its subsidiaries as such representatives may reasonably request;

 

   

provide to CLA and, if applicable, its accountants, counsel or other representatives, (i) such information and such other materials and resources relating to any legal proceeding initiated, pending or threatened during the Interim Period, or to the compliance and risk management operations and activities of Ouster and its subsidiaries during the Interim Period, in each case, as CLA or such representative may reasonably request, (ii) prompt written notice of any material status updates in connection with any such legal proceedings or otherwise relating to any compliance and risk management matters or decisions of Ouster or its subsidiaries, and (iii) copies of any communications sent or received by Ouster or its subsidiaries in connection with such legal proceedings, matters and decisions;

 

   

as soon as reasonably practicable following the date of the Merger Agreement, Ouster shall deliver to CLA audited consolidated balance sheets and statements of operations and comprehensive loss, stockholders’ equity and cash flows of Ouster and its subsidiaries as of and for the years ended December 31, 2019 and 2018, together with the auditor’s reports thereon, which comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act applicable to a registrant (collectively, the “PCAOB Financial

 

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Statements”); provided, that upon delivery of such PCAOB Financial Statements, such financial statements shall be deemed “Audited Financial Statements” for purposes of the Merger Agreement and the representation and warranties set forth in Section 4.8 of the Merger Agreement shall be deemed to apply to such Audited Financial Statements with the same force and effect as if made as of the date of the Merger Agreement;

 

   

act in good faith to deliver to CLA, as soon as reasonably practicable following the date of the Merger Agreement, (x) audited financial statements (together with the auditor’s reports thereon) of Ouster and its subsidiaries as of and for the year ended December 31, 2020 and (y) if the Closing has not occurred prior to May 14, 2021, unaudited financial statements for Ouster and its Subsidiaries as of and for the three-month period ended March 31, 2021;

 

   

at or prior to Closing, terminate and settle all Affiliate Agreements (as defined in the Merger Agreement) set forth in the applicable section of the Ouster Disclosure Letter without further liability to CLA, Ouster or any of its subsidiaries; and

 

   

during the Interim Period, not, and to use reasonable best efforts to cause its representatives to not, directly or indirectly: (i) initiate, solicit or engage in any negotiations with any person with respect to certain alternative transactions, (ii) e