Actionable news
0
All posts from Actionable news
Actionable news in AAVL: AVALANCHE BIOTECHNOLOGIES INC,

Definitive proxy statement relating to merger or acquisition

QUESTIONS AND ANSWERS

ABOUT THE 2016 ANNUAL MEETING AND THE TRANSACTION

The following questions and answers are intended to briefly address some commonly asked questions regarding the 2016 Annual Meeting and the Transaction. These questions and answers may not address all questions that may be important to you as a stockholder. You should read the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

Q:

Why am I receiving this proxy statement?

A:

We have mailed these proxy materials to you because our Board is soliciting your proxy to vote at the 2016 Annual Meeting or any adjournments or postponements thereof that take place. As a stockholder, you are invited to attend the 2016 Annual Meeting and are requested to vote on the proposals described in this proxy statement. However, you do not need to attend the 2016 Annual Meeting in order to vote.

A:

The 2016 Annual Meeting will be held on May 10, 2016, at 10:00 a.m. local time, at the offices of Munger, Tolles & Olson LLP at 560 Mission St., 27th Floor, San Francisco, CA 94105.

A:

Only stockholders of record as of the close of business on March 18, 2016 (the Record Date) will be entitled to vote at the 2016 Annual Meeting. As of the close of business on the Record Date, there were 26,989,641 shares of our common stock issued and outstanding and entitled to vote, held by 19 stockholders of record. Each stockholder is entitled to one vote for each share of our common stock held by such stockholder on the Record Date on each of the proposals presented in this proxy statement.

If, at the close of business on March 18, 2016, your shares were registered directly in your name with our transfer agent, Wells Fargo Shareowner Services, then you are a stockholder of record. As a stockholder of record, you may vote in person at the 2016 Annual Meeting or vote by proxy. Whether or not you plan to attend the 2016 Annual Meeting, please vote as soon as possible by completing and returning the enclosed WHITE proxy card or vote by proxy over the telephone or on the internet as instructed below to ensure your vote is counted.

If, at the close of business on March 18, 2016, your shares were not held in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in street name and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the 2016 Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent how to vote the shares in your account. You are also invited to attend the 2016 Annual Meeting. However, because you are not the stockholder of record, you may not vote your shares in person at the 2016 Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.

Q:

What proposals will be considered at the 2016 Annual Meeting?

A:

At the 2016 Annual Meeting, you will be asked to consider and vote on the following proposals:

a proposal to approve the issuance, which we refer to as the Stock Issuance, to the Annapurna Shareholders pursuant to the Acquisition Agreement of (x) 13,135,189 shares of our common stock plus (y) any additional number of shares of our common stock to be exchanged for shares of Annapurna issued in connection with the exercise of any outstanding options or other rights to purchase

capital stock of Annapurna prior to or concurrently with the closing of the Transaction, which we refer to, collectively, as the New Avalanche Shares;

a proposal to elect two Class II directors to hold office until the 2019 Annual Meeting of Stockholders or until their successors are elected;

a proposal to ratify the selection, by the audit committee of our Board, of Deloitte & Touche LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2016;

a proposal to adjourn the 2016 Annual Meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the 2016 Annual Meeting to approve the proposal to approve the Stock Issuance; and

a proposal to transact such other business as may properly come before the 2016 Annual Meeting or any adjournment or postponement thereof.

A:

Avalanche, Annapurna, the Annapurna Shareholders, and Shareholder Representative Services LLC, acting as the representative of the Annapurna Shareholders, have entered into the Acquisition Agreement, pursuant to which Avalanche will acquire from the Annapurna Shareholders all of the issued and outstanding shares of capital stock of Annapurna, in exchange for the New Avalanche Shares. The outstanding options or other rights to purchase capital stock of Annapurna (the Annapurna Options) will be converted into options relating to approximately 4.7 million shares of Avalanche common stock (as may be reduced to reflect any exercise of Annapurna Options prior to or concurrently with the closing of the Transaction), which we refer to as the Avalanche Options. Avalanche and Annapurna expect the Transaction to be consummated in the second quarter of 2016, subject to the satisfaction of applicable conditions. The New Avalanche Shares and shares underlying the vested and unvested Avalanche Options would represent approximately 37.5% of our post-closing issued and outstanding shares of common stock (inclusive of shares of our common stock underlying vested and unvested options, as calculated on a treasury stock-method basis as of January 28, 2016). Upon the closing of the Transaction, Annapurna will become a wholly-owned subsidiary of Avalanche.

Q:

Why is stockholder approval required for the Stock Issuance?

A:

Our common stock is listed on, and we are subject to the rules and regulations of, the NASDAQ Global Market, which we refer to as NASDAQ.

NASDAQ rules require stockholder approval prior to the issuance of securities in connection with the acquisition of the stock or assets of another company if (a) the common stock, or securities convertible into common stock, that we issue has or will have upon issuance voting power equal to or in excess of 20% of the voting power of our securities outstanding before the issuance or (b) the number of shares of common stock, or securities convertible into common stock, to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance. In addition, NASDAQ rules require stockholder approval prior to the issuance of securities in a private placement if the number of shares of common stock, or securities convertible into common stock, to be issued is or will be equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock. Under relevant NASDAQ rules, stockholder approval is not required to effect the conversion of the Annapurna Options into the Avalanche Options.

We are proposing to issue 13,135,189 shares of our common stock to the Annapurna Shareholders pursuant to the Acquisition Agreement, with such number of shares to be increased based on the exercise of the Annapurna Options by their holders prior to or concurrently with the closing of the Transaction. The number

of shares we will issue will exceed 20% of both the voting power and the number of shares of our common stock outstanding before the issuance. Accordingly, at the 2016 Annual Meeting, we are asking holders of shares of our common stock to consider and vote on the Stock Issuance to satisfy NASDAQ rules.

Stockholder approval of the Stock Issuance is a condition to completion of the Transaction pursuant to the Acquisition Agreement, and we believe the Transaction is beneficial to our stockholders for a number of reasons. See The TransactionRecommendation of our Board and Avalanches Reasons for the Transaction , beginning on page 45, for a description of these reasons.

Q:

What will happen if our stockholders vote to approve the Stock Issuance?

A:

If the Stock Issuance is approved and all required authorizations, clearances, consents and governmental approvals are obtained, subject to the satisfaction or waiver of the other closing conditions, we expect the Transaction to be completed in the second quarter of 2016.

Q:

What will happen if our stockholders do not vote to approve the Stock Issuance?

A:

Stockholder approval of the Stock Issuance is a condition to the consummation of the Transaction. If this proposal is not approved, the Acquisition Agreement may be terminated by Avalanche or Annapurna. In the event of termination for failure of our stockholders to approve the Stock Issuance, we will be required to pay to Annapurna a $4.0 million reverse termination fee, which may increase to $6.0 million upon the occurrence of certain other triggering events. We provide additional information relating to termination rights under the Acquisition Agreement in the section below entitled The Acquisition AgreementReverse Termination Fee beginning on page 70.

Q:

Are there risks associated with the Transaction?

A:

Yes. The material risks associated with the Transaction that are known to us are discussed in the section entitled Risk Factors beginning on page 14.

Q:

What will happen to outstanding options or other rights to purchase capital stock of Annapurna?

A:

Upon the closing of the Transaction, the Annapurna Options will be exchanged for the Avalanche Options, which relate to approximately 4.7 million shares of Avalanche common stock. The number of Avalanche Options are subject to reduction based on the exercise of the Annapurna Options by their holders prior to the closing of the Transaction. We expect to grant the Avalanche Options under our 2014 Equity Incentive Plan.

Q:

What will happen to my Avalanche common stock upon completion of the Transaction?

A:

Each outstanding share of our common stock will be unaffected by the Transaction and will remain outstanding. Holders of our common stock will continue to hold the shares that they currently hold following the completion of the Transaction.

Q:

Will the stock issuance dilute the existing stockholders percentage of ownership in Avalanche?

A:

Yes. The Stock Issuance will dilute your existing holdings of our common stock. As of the Record Date, there were approximately 26,989,641 shares of our common stock issued and outstanding. If we consummate the Transaction, we will issue approximately 13.1 million shares of our common stock, and the Annapurna Options will be converted into the Avalanche Options, which relate to approximately 4.7 million shares of Avalanche common stock. The number of newly issued shares and the number of shares that the

Annapurna Options relate to are subject to increase and decrease, respectively, based on the exercise of Annapurna Options by their holders prior to or concurrently with the closing of the Transaction. Upon the closing of the Transaction, the Annapurna Shareholders will own approximately 37.5% of Avalanche common stock and existing Avalanche stockholders will own approximately 62.5% of Avalanche common stock (inclusive of shares of our common stock underlying vested and unvested options, as calculated on a treasury stock method basis as of January 28, 2016). Therefore, the ownership and voting interests of our existing stockholders will be proportionately reduced.

Q:

Do I, as a stockholder of Avalanche, have dissenters or appraisal rights?

A:

No. Holders of our common stock will not be entitled to any dissenters rights or appraisal rights with respect to any of the proposals to be voted on at the 2016 Annual Meeting.

Q:

Other than the Acquisition Agreement, what other agreements have been or will be entered into in connection with the proposed Transaction?

A:

In order to induce Annapurna to enter into the Acquisition Agreement, certain officers, directors and other stockholders of Avalanche (solely in their capacity as holders of shares of Avalanches common stock) entered into support and voting agreements with Annapurna, which we refer to collectively as the Support Agreements, covering approximately 10.3% of the outstanding shares of Avalanches common stock as of January 28, 2016 (including restricted stock units vested at July 29, 2016 and options exercisable at July 29, 2016 on an as converted to common stock basis). Each of these persons agreed to vote, or cause to be voted, all its shares in favor of the Stock Issuance and any other matters necessary for consummation of the Transaction and against, among other things, any proposal opposing or competing with the Transaction.

As a condition to the closing of the Transaction, we and the Annapurna Shareholders will enter into a second amended and restated investor rights agreement, which we refer to as the Investor Rights Agreement, pursuant to which the Annapurna Shareholders and other stockholders of Avalanche will have, among other things, certain demand and piggyback registration rights under the Securities Act of 1933, as amended (the Securities Act), with respect to their registrable shares, subject to certain limitations.

We provide additional information relating to the Support Agreements and the Investor Rights Agreement in the section below entitled Agreements Relating to the Transaction beginning on page 72.

Q:

Are there restrictions on the resale of the New Avalanche Shares issued to the Annapurna Shareholders in connection with the Transaction?

A:

Yes. The New Avalanche Shares will be considered restricted securities under Rule 144 of the Securities Act.

The New Avalanche Shares will be subject to the further restrictions on transfer contained in the Investor Rights Agreement. Each holder of the New Avalanche Shares will agree not to transfer its shares unless, subject to certain exceptions, such transfer is made pursuant to a registration statement or Rule 144.

Q:

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

A:

Because our existing stockholders do not participate in the Transaction, they will not recognize gain or loss in connection with the Transaction with respect to their shares of our common stock.

Q:

What other matters may arise at the 2016 Annual Meeting?

A:

Other than the proposals described in this proxy statement, we do not expect any other matters to be presented for a vote at the 2016 Annual Meeting. If any other matter is properly brought before the 2016 Annual Meeting, your proxy gives authority to the individuals named in the proxy to vote on such matters in their discretion.

Q:

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

A:

If your shares are registered in your name as evidenced and recorded in the stock ledger maintained by us and Wells Fargo Shareowner Services, our transfer agent, you are a stockholder of record. If your shares are held in the name of your broker, bank or other nominee, these shares are held in street name and you are the beneficial owner.

A:

For Proposal No. 1 to approve the Stock Issuance, you may either vote FOR or AGAINST or you may abstain from voting. For Proposal No. 2 to elect two Class II directors to hold office until the 2019 Annual Meeting of Stockholders or until their successors are elected, you may either vote FOR all nominees to the board of directors or you may WITHHOLD your vote for any nominee you specify, or you may abstain from voting. For Proposal No. 3 to ratify the selection of Deloitte & Touche LLP as the independent registered public accounting firm of Avalanche for the fiscal year ending December 31, 2016, you may either vote FOR or AGAINST or you may abstain from voting. For Proposal No. 4 to adjourn the 2016 Annual Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1, you may either vote FOR or AGAINST or you may abstain from voting.

Q:

How do I cast my vote if I am a stockholder of record?

A:

If you are a stockholder with shares registered in your name, you may vote in person at the 2016 Annual Meeting or vote by proxy by telephone or internet or by mail. Whether or not you plan to attend the 2016 Annual Meeting, please vote as soon as possible to ensure your vote is counted. You may still attend the 2016 Annual Meeting and vote in person even if you have already voted by proxy. For more detailed instructions on how to vote using one of these methods, please see the section of this proxy statement entitled The 2016 Annual MeetingVoting Procedures beginning on page 26.

To vote in person. You may attend the 2016 Annual Meeting and we will give you a ballot when you arrive. If you need directions to the meeting, please visit www.avalanchebiotech.com .

To vote by proxy by telephone or internet. If you have telephone or internet access, you may submit your proxy by following the instructions provided in this proxy statement, or if you received paper proxy materials by mail, by following the instructions provided with your proxy materials and on the enclosed WHITE proxy card or voting instruction card.

To vote by proxy by mail . If you received paper proxy materials, you may submit your proxy by mail by completing and signing the enclosed WHITE proxy card and mailing it in the enclosed envelope. Your shares will be voted as you have instructed.

Q:

How do I cast my vote if I am a beneficial owner of shares registered in the name of my broker or bank?

A:

If you are a beneficial owner of shares registered in the name of your broker, bank, dealer or other similar organization, you should have received a WHITE proxy card and voting instructions with these proxy

materials from that organization rather than from us. Simply complete and mail the proxy card to ensure that your vote is counted. Alternatively, you may vote by telephone or over the internet as instructed by your broker or other agent. To vote in person at the 2016 Annual Meeting, you must obtain a valid proxy from your broker or other agent. Follow the instructions from your broker or other agent included with these proxy materials, or contact your broker or bank to request a proxy form.

A:

On each matter to be voted upon, you have one vote for each share of our common stock you hold as of the Record Date.

A:

VCM, a beneficial holder of 100 shares, or approximately 0.00037%, of our common stock, acquired in March 2016, has notified us that it intends to nominate four candidates for election to our Board at the 2016 Annual Meeting, even though there are only two Class II directors to be elected at the 2016 Annual Meeting in accordance with our amended and restated certificate of incorporation. For additional information about VCM, please see the section of this proxy statement entitled Other Matters beginning on page 142. You may receive solicitation materials, including a proxy statement and proxy card, from VCM or others seeking your proxy to vote for VCMs nominees, although at this time, we have no knowledge whether VCM will send out any solicitation materials. We bear no responsibility for the accuracy or completeness of any such materials or statements made by or on behalf of VCM. IF YOU DO RECEIVE ANY SOLICITATION MATERIALS OTHER THAN FROM AVALANCHE, THE BOARD URGES YOU NOT TO SIGN OR RETURN ANY PROXY CARD SENT TO YOU BY VCM OR ANY OTHER THIRD PARTY. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE BOARDS NOMINEES, WHOSE NAMES ARE SET FORTH ON THE ENCLOSED WHITE PROXY CARD.

In the event VCM or any other third party sends you a proxy card, voting to WITHHOLD with respect to VCMs nominations is not the same as voting for the Boards director nominees because a vote to WITHHOLD with respect to VCM will revoke any proxy you previously submitted. If you have already voted using VCMs proxy card, you have the right to change your vote by voting via the internet or by telephone by following the instructions on the WHITE proxy card, or by completing and mailing the enclosed WHITE proxy card in the enclosed pre-paid envelope. Only the latest validly executed proxy that you submit will be countedany proxy may be revoked at any time prior to its exercise at the 2016 Annual Meeting by following the instructions listed under Revocation of Proxies on page 27. If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor, Morrow & Co., LLC, toll free at 800-662-5200 or via email at aavl@morrowco.com.

Q:

What if I return a WHITE proxy card but do not make specific choices?

A:

If you return a signed and dated WHITE proxy card without marking any voting selections, your shares will be voted FOR the approval of the Stock Issuance, FOR the election of each of the Boards nominees for director, FOR the ratification of the selection of Deloitte & Touche LLP as the independent registered public accounting firm of Avalanche for the fiscal year ending December 31, 2016, and FOR the adjournment of the 2016 Annual Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1. If any other matter is properly presented at the 2016 Annual Meeting, your proxyholder (one of the individuals named on your WHITE proxy card) will vote your shares using his or her best judgment.

Q:

Who is paying for this proxy solicitation?

A:

We will pay for the entire cost of soliciting proxies. Our expenses related to the solicitation of proxies may increase and substantially exceed those normally spent for an annual meeting of stockholders if a contest is initiated by VCM. Such additional costs are expected to be, in the aggregate, approximately $150,000, exclusive of any costs related to any litigation in connection with the 2016 Annual Meeting. These additional solicitation costs are expected to include: an additional fee payable to our proxy solicitor; fees of outside counsel to advise us in connection with a contested solicitation of proxies; and increased mailing costs, such...


More