Ouster, Inc. (NYSE:OUST) signed an agreement to acquire Sense Photonics, Inc. for approximately $170 million on October 5, 2021. Pursuant to the terms of the Merger Agreement, at the effective time of the Merger, the holders of Sense capital stock, options that will not be assumed by Ouster in the Merger, warrants and convertible notes are collectively entitled to receive Ouster common stock priced at $10.01 per share and, with respect to such unassumed options, cash, for an aggregate value of $105?million, subject to adjustments for net working capital, unpaid indebtedness, unpaid transaction expenses, the amount of an expense fund for the Holders? Agent and the aggregate exercise price of Sense options that will be assumed by Ouster in the Merger.?Following such adjustments, which will not be determined until the closing and which are subject to post-closing purchase price adjustments, Ouster currently expects to issue approximately 9.5 million shares of Ouster common stock, inclusive of approximately 0.5 million shares underlying assumed vested options and approximately 1.6 million shares which will initially be held back at the closing by Ouster for purposes of satisfying any post-closing purchase price adjustments and indemnification claims under the Merger Agreement, and with respect to unassumed options, pay an immaterial amount of cash at the closing. Such shares held back will be released to applicable former Sense securityholders along with the applicable portion of any remaining amount in the expense fund for the Holders? Agent, subject to adjustments in accordance with the Merger Agreement, approximately 18 months after the closing of the Merger. Shares of Ouster common stock issued in connection with the Merger will be subject to a?180-day?lock-up?from the closing date prohibiting any transfer of such shares (with certain exceptions).?Under the Merger Agreement, Ouster and Sense have also agreed to issue, immediately prior to the closing of the Merger, Sense restricted stock units to Sense employees that will continue to be employed by Ouster or a subsidiary following the Merger, which restricted stock units will be assumed by Ouster in the Merger and total in the aggregate approximately 4.8 million Ouster restricted stock units assuming all such Sense employees continue employment with Ouster. Each award of Sense Restricted Stock Units outstanding as of immediately prior to the effective time, that is held by a Sense Employee who shall continue to be employed by the Surviving Corporation or an Affiliate thereof following the Effective Time shall, by virtue of the Merger and without any further action by Ouster, Sense, or the holder of such award of Sense RSUs, be assumed by Ouster and converted into an award of that number of Ouster restricted stock units, equal to the product of the number of Sense RSUs subject to such award immediately prior to the Effective Time,?multiplied?by?the Exchange Ratio. At the Effective Time, each Sense Option (whether vested or unvested) that is outstanding and unexercised as of immediately prior to the Effective Time and held by a Sense Employee shall, by virtue of the Merger and without any further action by Ouster, Sense, or the holder of such Sense Option, be assumed (or in the case of a Sense Option that is an EMI Option, be exchanged) by Ouster and converted into (or in the case of a Sense Option that is an EMI Option, be granted as) an option to purchase a number of validly issued, fully paid and?non-assessable?shares of Ouster Common Stock, equal to the product of the number of shares of Sense Common Stock subject to such Sense Option immediately prior to the Effective Time,?multiplied?by the Exchange Ratio. Sense?will become wholly owned subsidiary of Ouster after completion of the acquisition. The Merger Agreement contains certain termination rights, including, among others, the right to terminate the Merger Agreement by mutual written consent of Ouster and Sense and by Ouster or Sense if the Merger has not been consummated by the date that is 90 days after the signing of the Merger Agreement, subject to limited exceptions. Certain individuals have each executed Ouster?s customary form of employment offer letter, together with a confidential information and invention assignment agreement and?non-competition?agreement each to become effective upon the closing. Concurrently with the execution of this agreement, and as a condition and inducement to Ouster?s willingness to enter into this agreement, Sense consenting stockholders enter into and deliver to Acquirer a stockholder agreement. A new automotive division will be set up, which will be run by Sense Chief Executive Officer Shauna McIntyre. Current Sense Photonics Chief Executive Officer, Shauna McIntyre, will be joining Ouster as the President of Ouster Automotive. Approximately 80 Sense employees are expected to join Ouster post-transaction, certain key employees of Sense have agreed to five-year retention packages. The transaction is subject to approval by Sense shareholders, retention through the closing of the Merger of a certain percentage of Sense employees selected by Ouster, government approvals, each Key Employee shall have signed an Offer Letter and a?Non-Competition?Agreement, the employment of each of the Designated Employees shall have been terminated effective no later than immediately prior to the closing and such Designated Employees shall have executed a Termination and Release Agreement and each Transition Employee shall have executed a Consulting Agreement. The transaction is also subject to customary closing conditions. The transaction is approved unanimously by the Board of Sense and Board of Directors of Ouster. Transaction is expected to close in the fourth quarter of 2021. The cash impact on Ouster is expected to be net neutral in 2022. The acquisition is expected to not only be revenue accretive but also technology accretive. Greg Roussel, Grace Lee, James Metz, Sarah Gadd, JD Marple, Robert Blamires, Joseph Simei, Peter Todaro, Christopher Norton, Gail Crawford, Deborah Kirk, Benjamin Potter, Haim Zaltzman, Drew Capurro and Irina Yevmenenko of Latham?& Watkins LLP acted as legal advisors to Ouster. Mark Tanoury and Laura Medina of Cooley LLP acted as legal advisor to Sense.