DEFM14A 1 d65966ddefm14a.htm DEFM14A DEFM14A
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SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.    )

 

 

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

Check the appropriate box:

 

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

COLLECTIVE GROWTH CORPORATION

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

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

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

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

Amount previously paid:

 

$68,903.31

  (2)  

Form, Schedule or Registration Statement No.:

 

Form F-4 (File No. 333-252023)

  (3)  

Filing Party:

 

Innoviz Technologies Ltd.

  (4)  

Date Filed:

 

January 11, 2021

 

 

 


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PROXY STATEMENT/PROSPECTUS

 

LOGO    LOGO

PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS

OF

COLLECTIVE GROWTH CORPORATION

 

 

PROSPECTUS FOR UP TO 25,925,901 ORDINARY SHARES,

18,373,078 WARRANTS,

AND 18,373,078 ORDINARY SHARES UNDERLYING WARRANTS

OF

INNOVIZ TECHNOLOGIES LTD.

The board of directors of Collective Growth Corporation, a Delaware corporation (“Collective Growth”) has unanimously approved the business combination agreement (“Business Combination Agreement”), dated as of December 10, 2020, by and among Collective Growth, Innoviz Technologies Ltd., a company organized under the laws of the State of Israel (the “Company” or “Innoviz”), Hatzata Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), Perception Capital Partners LLC, a Delaware limited liability company (“Perception”) (solely for purposes of Sections 2.2(d), 2.3(a), 2.8, 2.9, 5.2, 5.5, 7.2 and Article VIII of the Business Combination Agreement) and Antara Capital LP, a Delaware limited partnership and investment manager acting on behalf of certain funds it manages and/or designees (“Antara Capital”) (solely for purposes of Sections 5.2, 5.5, 7.2 and Article VIII of the Business Combination Agreement). Pursuant to the Business Combination Agreement, Merger Sub will merge with and into Collective Growth, with Collective Growth surviving the merger (the “Business Combination”). As a result of the Business Combination, and upon consummation of the Business Combination and the other transactions contemplated by the Business Combination Agreement (the “Transactions”), Collective Growth will become a wholly owned subsidiary of the Company, with the securityholders of Collective Growth becoming securityholders of the Company.

Pursuant to the Business Combination Agreement, at the effective time of the Business Combination (the “Effective Time”), (a) each share of Class A Common Stock of Collective Growth, par value $0.0001 per share (“Class A Stock”), outstanding immediately prior to the Effective Time will be exchanged for one Innoviz ordinary share (the “Exchange Ratio”), (b) each share of Class B Common Stock of Collective Growth, par value $0.0001 per share (“Class B Stock” and, together with the Class A Stock, the “Collective Growth Common Stock”), outstanding immediately prior to the Effective Time, after giving effect to the forfeiture of 1,875,000 shares of Class B Stock pursuant to that certain letter agreement dated December 10, 2020, by and among Collective Growth and certain holders of Class B Stock (the “Forfeiture Agreement”), will be exchanged for one Innoviz ordinary share, (c) each warrant of Collective Growth entitling the holder to purchase one share of Class A Stock per warrant at a price of $11.50 per share (each, a “Collective Growth warrant”) outstanding immediately prior to the Effective Time, after giving effect to the forfeiture of 187,500 Collective Growth warrants pursuant to the Forfeiture Agreement, will be assumed by Innoviz and will become a warrant of Innoviz (“Innoviz warrant”), with the number of Innoviz ordinary shares underlying the Innoviz warrants and the exercise price of such Innoviz warrants subject to adjustment in accordance with the Business Combination Agreement, (d) Innoviz will issue to Perception 3,027,747 Innoviz warrants, (e) each outstanding Innoviz preferred share will be converted into one Innoviz ordinary share and (f) Innoviz will issue to certain members of the Company’s management (“Company Management”) 2,500,000 Innoviz ordinary shares and 3,500,000 Innoviz warrants, in each case less any applicable withholding taxes.

In addition, pursuant to the Business Combination Agreement, if the trading price of the Innoviz ordinary shares on the Nasdaq Capital Market (“Nasdaq”) is greater than $12.50 (the “Earnout Target”) for any period of ten (10) trading days out of a twenty (20) consecutive trading-days at any time after the closing of the Transactions until the fourth anniversary of the date of the closing of the Transactions, (i) Innoviz will issue to Perception up to 2,175,000 Innoviz ordinary shares (“Perception Earnout Shares”) as additional consideration for services provided by Perception to Innoviz, with the number of Innoviz ordinary shares to be issued to Perception to be calculated based on the amount of aggregate cash proceeds available for release to Collective Growth from Collective Growth’s trust account in connection with the transactions contemplated hereby (after, for the avoidance of doubt, giving effect to all redemptions but before release of any other funds, as described in more detail herein) (the “Initial Transaction Proceeds”), and (ii) Innoviz will issue to Company Management 1,250,000 Innoviz ordinary shares, in each case less any applicable withholding taxes.

Concurrently with the execution of the Business Combination Agreement, Innoviz and Antara Capital, on behalf of the funds it manages and/or its designees, entered into a put option agreement (“Put Option Agreement”), pursuant to which Innoviz caused certain funds and/or designees of Antara Capital (“Antara”) to subscribe for a number of Innoviz ordinary shares in the PIPE with an aggregate equity value equal to $70,000,000 pursuant to a Put Share Subscription


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Agreement. In consideration for entering into the Put Option Agreement, Innoviz agreed to issue to Antara Capital Master Fund LP (“Antara Capital Master”) 3,784,753 Innoviz warrants and up to 3,125,000 Innoviz ordinary shares, with the number of Innoviz ordinary shares to be issued to Antara Capital Master to be calculated based on the amount of Initial Transaction Proceeds. If Innoviz issues to Perception the Perception Earnout Shares, then Innoviz will also issue to Antara Capital Master up to an additional 325,000 Innoviz ordinary shares, with the number of Innoviz ordinary shares to be issued to Antara Capital Master to be calculated based on the amount of Initial Transaction Proceeds (the “Antara Earnout Shares”).

On February 17, 2021, Innoviz effected a reverse stock split to cause the value of the outstanding Innoviz ordinary shares immediately prior to the Effective Time to equal $10.00 per share (the “Stock Split”).

Concurrently with and following the execution of the Business Combination Agreement, Innoviz and certain accredited investors (“PIPE Investors”) entered into a series of subscription agreements (“Subscription Agreements”), including the Put Share Subscription Agreement providing for the purchase by the PIPE Investors at the Effective Time of an aggregate of 23,000,000 Innoviz ordinary shares (“PIPE Shares”) at a price per share of $10.00, for gross proceeds to Innoviz of $230,000,000 (collectively, the “PIPE”). The closing of the PIPE is conditioned upon the consummation of the Transactions.

This proxy statement/prospectus covers the Innoviz ordinary shares and Innoviz warrants issuable to the securityholders of Collective Growth, Perception, and Antara Capital Master as described above. Accordingly, we are registering up to an aggregate of 25,925,901 Innoviz ordinary shares, 18,373,078 Innoviz warrants, and 18,373,078 Innoviz ordinary shares issuable upon the exercise of the warrants. We are not registering the Innoviz ordinary shares and Innoviz warrants issuable to the Innoviz securityholders, Company Management, or the PIPE Investors.

Proposals to approve the Business Combination Agreement and the other matters discussed in this proxy statement/prospectus will be presented at the special meeting of Collective Growth stockholders scheduled to be held on March 31, 2021 in virtual format.

Although Innoviz is not currently a public reporting company, following the effectiveness of the registration statement of which this proxy statement/prospectus is a part and the closing of the Business Combination, Innoviz will become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Innoviz intends to apply for listing of the Innoviz ordinary shares and Innoviz warrants on Nasdaq under the proposed symbols “INVZ” and “INVZW”, respectively, to be effective at the consummation of the Business Combination. It is a condition of the consummation of the Transactions that the Innoviz ordinary shares are approved for listing on Nasdaq (subject only to official notice of issuance thereof and round lot holder requirements). While trading on Nasdaq is expected to begin on the first business day following the date of completion of the Business Combination, there can be no assurance that Innoviz’s securities will be listed on Nasdaq or that a viable and active trading market will develop. See “Risk Factors” beginning on page 15 for more information.

Innoviz will be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, and is therefore eligible to take advantage of certain reduced reporting requirements otherwise applicable to other public companies.

Innoviz will also be a “foreign private issuer” as defined in the Exchange Act and will be exempt from certain rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, Innoviz’s officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions under Section 16 of the Exchange Act. Moreover, Innoviz will not be required to file periodic reports and financial statements with the U.S. Securities and Exchange Commission as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

The accompanying proxy statement/prospectus provides Collective Growth stockholders with detailed information about the Business Combination and other matters to be considered at the special meeting of Collective Growth. We encourage you to read the entire 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 in “Risk Factors” beginning on page 15 of the accompanying proxy statement/prospectus.

None of the Securities and Exchange Commission, the Israel Securities Authority or any state securities commission has approved or disapproved of the securities to be issued in connection with the Business Combination, or determined if this proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated March 11, 2021, and is first being mailed to Collective Growth stockholders on or about March 11, 2021.


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Notice of Special Meeting of Stockholders

of Collective Growth Corporation

To Be Held on March 31, 2021

TO THE STOCKHOLDERS OF COLLECTIVE GROWTH CORPORATION:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Collective Growth Corporation (“Collective Growth”), a Delaware corporation, will be held at 9:00 a.m. eastern time, on March 31, 2021. Due to health concerns stemming from the COVID-19 pandemic, and to support the health and well-being of our stockholders, the special meeting will be a virtual meeting. You are cordially invited to attend and participate in the special meeting online by visiting https://www.cstproxy.com/collectivegrowthcorp/sm2021. The special meeting will be held for the following purposes:

 

1.

Proposal No. 1—The Business Combination Proposal—to consider and vote upon a proposal to approve and adopt the Business Combination Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A, and the transactions contemplated therein, including the Business Combination whereby Merger Sub will merge with and into Collective Growth, with Collective Growth surviving the merger as a wholly owned subsidiary of Innoviz—we refer to this proposal as the “business combination proposal”;

 

2.

Proposal No. 2—The Charter Proposals—to approve the following material differences between Collective Growth’s amended and restated certificate of incorporation (“SPAC Charter”) and Innoviz’s amended and restated articles of association (“Innoviz Articles”) to be effective upon the consummation of the Business Combination: (i) the name of the new public entity will be “Innoviz Technologies Ltd.” as opposed to “Collective Growth Corporation”; (ii) the Innoviz Articles will provide for one class of ordinary shares as opposed to the two classes of Collective Growth Common Stock provided for in the SPAC Charter; (iii) Innoviz’s corporate existence is perpetual as opposed to Collective Growth’s corporate existence terminating if a business combination is not consummated within a specified period of time; and (iv) the Innoviz Articles will not include the various provisions applicable only to special purpose acquisition corporations that the SPAC Charter contains—we refer to these proposals as the “charter proposals”;

 

3.

Proposal No. 3—The Adjournment Proposal—to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, if the parties are not able to consummate the Business Combination—we refer to this proposal as the “adjournment proposal”.

We also will transact any other business as may properly come before the special meeting or any adjournment or postponement thereof.

The items of business listed above are more fully described elsewhere in the proxy statement/prospectus. Whether or not you intend to attend the special meeting, we urge you to read the attached proxy statement/prospectus in its entirety, including the annexes and accompanying financial statements, before voting. IN PARTICULAR, WE URGE YOU TO CAREFULLY READ THE SECTION IN THE PROXY STATEMENT/PROSPECTUS ENTITLED “RISK FACTORS.

Only holders of record of Collective Growth Common Stock at the close of business on March 4, 2021 (the “record date”) are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements of the special meeting.

After careful consideration, Collective Growth’s board of directors has determined that each of the proposals listed is fair to and in the best interests of Collective Growth and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” each of the proposals set forth above. When you consider the recommendations of Collective Growth’s board of directors, you should keep in mind that Collective Growth’s directors and officers may have interests in the Business Combination that conflict with, or are different from, your interests as a stockholder of Collective Growth. See the section entitled “Proposal One—The Business Combination Proposal—Interests of Certain Persons in the Business Combination.”


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The closing of the Business Combination is conditioned on approval of the business combination proposal and the charter proposals. If either of these proposals is not approved or the nine nominees identified in this proxy statement/prospectus to serve as directors of Collective Growth after the closing of the Business Combination are not elected, and the applicable closing condition in the Business Combination Agreement is not waived, the remaining proposals will not be presented to stockholders for a vote. The adjournment proposal is not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus.

All Collective Growth stockholders are cordially invited to attend the special meeting, which will be held virtually over the Internet at https://www.cstproxy.com/collectivegrowthcorp/sm2021. To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a holder of record of Collective Growth Common Stock on the record date, you may also cast your vote at the special meeting. If your Collective Growth Common Stock is held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting, obtain a proxy from your broker or bank.

A complete list of Collective Growth stockholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at the principal executive offices of Collective Growth for inspection by stockholders during business hours for any purpose germane to the special meeting.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting virtually or not, please complete, sign, date and return the enclosed proxy card as soon as possible in the envelope provided. 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 voted and counted.

If you have any questions or need assistance voting your Collective Growth Common Stock, please contact our proxy solicitors, D.F. King & Co., Inc., by telephone, at (800) 515-4479. Questions can also be sent by email to CGRO@dfking.com. This notice of special meeting is and the proxy statement/prospectus relating to the Business Combination will be available at https://www.cstproxy.com/collectivegrowthcorp/sm2021.

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

By Order of the Board of Directors

/s/ Bruce Linton

Bruce Linton

Chairman of the Board of Directors and

Chief Executive Officer

March 11, 2021

IF YOU RETURN YOUR SIGNED PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.

ALL HOLDERS (THE “PUBLIC STOCKHOLDERS”) OF SHARES OF CLASS A STOCK ISSUED IN COLLECTIVE GROWTH’S INITIAL PUBLIC OFFERING (THE “PUBLIC SHARES”) HAVE THE RIGHT TO HAVE THEIR PUBLIC SHARES REDEEMED FOR CASH IN CONNECTION WITH THE PROPOSED BUSINESS COMBINATION. PUBLIC STOCKHOLDERS ARE NOT REQUIRED TO AFFIRMATIVELY VOTE FOR OR AGAINST THE BUSINESS COMBINATION PROPOSAL, TO VOTE ON THE BUSINESS COMBINATION PROPOSAL AT ALL, OR TO BE HOLDERS OF RECORD ON THE RECORD DATE IN ORDER TO HAVE THEIR SHARES REDEEMED FOR CASH. THIS MEANS THAT ANY PUBLIC STOCKHOLDER HOLDING PUBLIC SHARES MAY EXERCISE REDEMPTION RIGHTS REGARDLESS OF WHETHER THEY ARE EVEN ENTITLED TO VOTE ON THE BUSINESS COMBINATION PROPOSAL.

TO EXERCISE REDEMPTION RIGHTS, HOLDERS MUST TENDER THEIR STOCK TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY, COLLECTIVE GROWTH’S TRANSFER


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AGENT, NO LATER THAN TWO (2) BUSINESS DAYS PRIOR TO THE SPECIAL MEETING. YOU MAY TENDER YOUR STOCK BY EITHER DELIVERING YOUR STOCK CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT WITHDRAWAL AT CUSTODIAN SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. 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. SEE “SPECIAL MEETING OF COLLECTIVE GROWTH STOCKHOLDERS—REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.


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     Page  

ABOUT THIS PROXY STATEMENT/PROSPECTUS

     i  

INDUSTRY AND MARKET DATA

     ii  

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

     iii  

SELECTED DEFINITIONS

     iv  

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE SPECIAL MEETING

     vi  

SUMMARY

     1  

UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA OF COLLECTIVE GROWTH AND INNOVIZ

     13  

RISK FACTORS

     15  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS; MARKET, RANKING AND OTHER INDUSTRY DATA

     55  

SPECIAL MEETING OF COLLECTIVE GROWTH STOCKHOLDERS

     57  

PROPOSAL ONE—THE BUSINESS COMBINATION PROPOSAL

     63  

PROPOSAL TWO—THE CHARTER PROPOSALS

     79  

PROPOSAL THREE—THE ADJOURNMENT PROPOSAL

     80  

THE BUSINESS COMBINATION AGREEMENT

     81  

AGREEMENTS ENTERED INTO IN CONNECTION WITH THE BUSINESS COMBINATION AGREEMENT

     91  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     93  

MATERIAL ISRAELI TAX CONSIDERATIONS

     107  

INFORMATION ABOUT THE COMPANIES

     113  

COLLECTIVE GROWTH’S BUSINESS

     115  

INNOVIZ’S BUSINESS

     121  

SELECTED HISTORICAL FINANCIAL DATA OF COLLECTIVE GROWTH

     139  

COLLECTIVE GROWTH’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     140  

SELECTED HISTORICAL FINANCIAL DATA OF INNOVIZ

     143  

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

     145  

UNAUDITED PROSPECTIVE FINANCIAL INFORMATION OF INNOVIZ TECHNOLOGIES

     160  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     163  

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     173  

DIRECTOR AND EXECUTIVE COMPENSATION

     178  

MANAGEMENT FOLLOWING THE BUSINESS COMBINATION

     184  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     194  


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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms a part of a registration statement on Form F-4 filed with the Securities and Exchange Commission, or SEC, by Innoviz, constitutes a prospectus of Innoviz under Section 5 of the Securities Act of 1933, as amended, or the Securities Act, with respect to the Innoviz ordinary shares to be issued to Collective Growth stockholders, Perception and Antara Capital Master in connection with the Business Combination, as well as the warrants to acquire Innoviz ordinary shares to be issued to Collective Growth warrant holders, Perception and Antara Capital Master and the Innoviz ordinary shares underlying such warrants. This document also constitutes a proxy statement of Collective Growth under Section 14(a) of the Securities Exchange Act, and the rules thereunder, and a notice of meeting with respect to the special meeting of Collective Growth stockholders to consider and vote upon the proposals to adopt the Business Combination Agreement and to adjourn the meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to adopt the Business Combination Agreement.

Unless otherwise indicated or the context otherwise requires, all references in this proxy statement/prospectus to the terms “Innoviz” and the “Company” refer to Innoviz Technologies Ltd., together with its subsidiaries. All references in this proxy statement/prospectus to “Collective Growth” refer to Collective Growth Corporation.

 

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INDUSTRY AND MARKET DATA

Unless otherwise indicated, information contained in this proxy statement/prospectus concerning Innoviz’s industry and the regions in which it operates, including Innoviz’s general expectations and market position, market opportunity, market share and other management estimates, is based on information obtained from various independent publicly available sources and reports provided to us (including reports from IHS Markit (Dec-2020) and Frost and Sullivan (August-2020), and other industry publications, surveys and forecasts). Innoviz has not independently verified the accuracy or completeness of any third-party information. Similarly, internal surveys, industry forecasts and market research, which Innoviz believes to be reliable based upon its management’s knowledge of the industry, have not been independently verified. While Innoviz believes that the market data, industry forecasts and similar information included in this proxy statement/prospectus are generally reliable, such information is inherently imprecise. In addition, assumptions and estimates of Innoviz’s future performance and growth objectives and the future performance of its industry and the markets in which it operates are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those discussed under the headings “Risk Factors,” “Cautionary Statement Regarding Forward-Looking Statements; Market, Ranking and Other Industry Data” and “Innoviz’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this proxy statement/prospectus.

The IHS Markit reports, data and information referenced herein (the “IHS Markit Materials”) are the copyrighted property of IHS Markit Ltd. and its subsidiaries (“IHS Markit”) and represent data, research, opinions or viewpoints published by IHS Markit, and are not representations of fact. The IHS Markit Materials speak as of the original publication date thereof and not as of the date of this document. The information and opinions expressed in the IHS Markit Materials are subject to change without notice and IHS Markit has no duty or responsibility to update the IHS Markit Materials. Moreover, while the IHS Markit Materials reproduced herein are from sources considered reliable, the accuracy and completeness thereof are not warranted, nor are the opinions and analyses which are based upon it. IHS Markit is a trademark of IHS Markit. Other trademarks appearing in the IHS Markit Materials are the property of IHS Markit or their respective owners.

 

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TRADEMARKS, TRADE NAMES AND SERVICE MARKS

This document contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this proxy statement/prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

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SELECTED DEFINITIONS

 

Ancillary Documents

means the Sponsor Letter Agreement, the Subscription Agreements, the Forfeiture Agreement, the Support Agreements, the Registration Rights Agreement, the Confidentiality and Lockup Agreement, the Warrant Agreement Amendment, the Put Option Agreement, the Put Share Subscription Agreement and each other agreement, document, instrument and/or certificate contemplated by Business Combination Agreement executed or to be executed in connection with the transactions contemplated thereby.

 

Antara Top-up Amount

means the aggregate purchase price of the additional Innoviz ordinary shares subscribed for by Antara, at a price per Innoviz ordinary share equal to the Put Share Price (as defined in the Put Option Agreement), following the special meeting, if any, to replace the cash released from Collective Growth’s trust account in satisfaction of SPAC Redemptions, if any.

 

Company Equity Award

means, as of any determination time, each option to purchase Innoviz ordinary shares that is outstanding and unexercised, whether granted under a Company Equity Plan or otherwise, and each other award to any current or former director, manager, officer, employee, individual independent contractor or other service provider of Innoviz or its subsidiaries of rights of any kind to receive any equity security of Innoviz or its subsidiaries under any Company Equity Plan or otherwise that is outstanding.

 

Company Equity Plan

means (a) Innoviz’s Share Option Plan and (b) each other plan that provides for the award to any current or former director, manager, officer, employee, individual independent contractor or other service provider of Innoviz or its subsidiaries of rights of any kind to receive equity securities of Innoviz or any subsidiary or benefits measured in whole or in part by reference to equity securities of Innoviz or any subsidiary.

 

DGCL

means the Delaware General Corporation Law, as amended.

 

Exchange Act

means the Securities Exchange Act of 1934, as amended.

 

GAAP

means accounting principles generally accepted in the United States of America.

 

Initial Transaction Proceeds

means an amount equal to the aggregate cash proceeds available for release to Collective Growth from Collective Growth’s trust account in connection with the transactions contemplated hereby (after, for the avoidance of doubt, giving effect to all of the SPAC Redemptions but before release of any other funds).

 

Innoviz preferred shares

means collectively the series A convertible preferred shares of the Innoviz, no par value (“Series A Preferred Shares”), series B convertible preferred shares of Innoviz, no par value (“Series B Preferred Shares”), series B-1 convertible preferred shares of Innoviz,

 

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no par value (“Series B-1 Preferred Shares”), series C convertible preferred shares of Innoviz, no par value (“Series C Preferred Shares”) and series C-1 convertible preferred shares of Innoviz, no par value (“Series C-1 Preferred Shares”).

 

LiDAR

means Light Detection and Ranging, a remote sensing method that uses light in the form of a pulsed laser to measure ranges (variable distances).

 

Perception Earnout Calculation

means the difference of (i) 4,271,153 and (ii) the product of (x) 4,271,153 and (y) the quotient of the sum of the Initial Transaction Proceeds and the Antara Top-up Amount divided by 150,000,000.

 

PCAOB

means the Public Company Accounting Oversight Board.

 

Securities Act

means the Securities Act of 1933, as amended.

 

Sponsor

means Shipwright SPAC I, LLC.

 

sponsor shares

means the 3,750,000 shares of Class B Stock held by the Sponsor and Collective Growth’s officers and directors, which were acquired for an aggregate purchase price of $25,000 prior to the Collective Growth IPO.

 

Transactions

means the transactions contemplated by the Business Combination Agreement and the Ancillary Documents.

 

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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND

THE SPECIAL MEETING

The questions and answers below highlight only selected information set forth elsewhere in this proxy statement/prospectus and only briefly address some commonly asked questions about the special meeting and the proposals to be presented at the special meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that may be important to Collective Growth stockholders. Stockholders are urged to carefully read this entire proxy statement/prospectus, including the annexes and the other documents referred to herein, to fully understand the proposed Business Combination and the voting procedures for the special meeting.

Q: Why am I receiving this proxy statement/prospectus?

A: Collective Growth and Innoviz have agreed to a business combination under the terms of the Business Combination Agreement that is described in this proxy statement/prospectus. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A and Collective Growth encourages its stockholders to read it in its entirety. Collective Growth’s stockholders are being asked to consider and vote upon a proposal to approve the Business Combination Agreement, which, among other things, provides for Merger Sub to be merged with and into Collective Growth with Collective Growth being the surviving corporation in the Business Combination and becoming a wholly owned subsidiary of Innoviz, and the other Transactions contemplated by the Business Combination Agreement. See “Proposal One—The Business Combination Proposal.

Q: Are there any other matters being presented to stockholders at the meeting?

A: In addition to voting on the business combination proposal, the stockholders of Collective Growth will vote on the following proposals:

 

   

to approve the following material differences between the SPAC Charter and the Innoviz Articles to be effective upon the consummation of the Business Combination: (i) the name of the new public entity will be “Innoviz Technologies Ltd.” as opposed to “Collective Growth Corporation”; (ii) the Innoviz Articles will provide for one class of ordinary shares as opposed to the two classes of Collective Growth Common Stock provided for in the SPAC Charter; (iii) Innoviz’s corporate existence is perpetual as opposed to Collective Growth’s corporate existence terminating if a business combination is not consummated within a specified period of time; and (iv) the Innoviz Articles will not include the various provisions applicable only to special purpose acquisition corporations that the SPAC Charter contains. See the section of this proxy statement/prospectus titled “Proposal Two—The Charter Proposals.”

 

   

to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, if the parties are not able to consummate the Business Combination for any reason. See the section of this proxy statement/prospectus titled “Proposal Three—The Adjournment Proposal.

Collective Growth will hold the special meeting of its stockholders to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the proposed Business Combination and the other matters to be acted upon at the special meeting. Stockholders should read it carefully.

The vote of stockholders is important. Regardless of how many shares you own, you are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.

Q: Why is Collective Growth providing stockholders with the opportunity to vote on the Business Combination?

A: Pursuant to the SPAC Charter, Collective Growth is required to provide stockholders with an opportunity to have their shares of Collective Growth Common Stock redeemed for cash, either through a stockholder meeting

 

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or tender offer. Due to the structure of the Transactions, Collective Growth is providing this opportunity through a stockholder vote.

Q: I am a Collective Growth warrant holder. Why am I receiving this proxy statement/prospectus?

A: The Collective Growth warrants will become exercisable following the Business Combination and will entitle holders to purchase Innoviz ordinary shares, with the number of shares and the exercise price adjusted in accordance with the Exchange Ratio, as described in more detail herein. This proxy statement/prospectus includes important information about Innoviz and the business of Innoviz and its subsidiaries following the closing of the Business Combination. Because holders of Collective Growth warrants will be entitled to purchase Innoviz ordinary shares after the closing of the Business Combination, we urge you to read the information contained in this proxy statement/prospectus carefully.

Q: What will happen to Collective Growth’s securities upon consummation of the Business Combination?

A: Collective Growth’s units, Class A Stock and the Collective Growth warrants are currently listed on Nasdaq under the symbols CGROU, CGRO and CGROW, respectively. Collective Growth’s securities will cease trading upon consummation of the Business Combination. Innoviz intends to apply for listing of the Innoviz ordinary shares and Innoviz warrants on Nasdaq under the proposed symbols “INVZ” and “INVZW,” respectively, to be effective upon the consummation of the Business Combination. While trading on Nasdaq is expected to begin on the first business day following the consummation of the Business Combination, there can be no assurance that Innoviz’s securities will be listed on Nasdaq or that a viable and active trading market will develop. See “Risk Factors—Risks Related to the Combined Company Following the Business Combination” for more information.

Q: Why is Collective Growth proposing the Business Combination?

A: Collective Growth was organized to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities.

On May 5, 2020, Collective Growth completed its initial public offering of units (the “Collective Growth IPO”), with each unit consisting of one share of its Class A Stock and one-half of one Collective Growth warrant, raising total gross proceeds of approximately $150,000,000. Since the Collective Growth IPO, Collective Growth’s activity has been limited to the evaluation of business combination candidates.

Collective Growth’s management believes Innoviz is an exciting company with an appealing market opportunity and growth profile, a strong position in its industry and a compelling valuation. As a result, Collective Growth believes that the Business Combination will provide Collective Growth stockholders with an opportunity to participate in the ownership of a company with significant growth potential. See the section entitled “Proposal One—The Business Combination Proposal—Collective Growth’s Reasons for the Business Combination and Recommendation of the Board of Directors.

Q: What is the “PIPE” transaction?

A: Concurrently with and following the execution of the Business Combination Agreement, Innoviz entered into subscription agreements with certain parties subscribing for Innoviz ordinary shares pursuant to which such investors have agreed to purchase, and Innoviz has agreed to sell to them, an aggregate of 23,000,000 Innoviz ordinary shares, for a purchase price of $10.00 per share and at an aggregate purchase price of $230,000,000. The $10.00 per share purchase price is a 12% discount to the trading price of Collective Growth’s Class A common stock on the record date.

 

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Q: Did Collective Growth’s board of directors obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

A: No. Collective Growth’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Accordingly, investors will be relying solely on the judgment of Collective Growth’s board of directors and its advisors in valuing Innoviz and will be assuming the risk that the Collective Growth board may not have properly valued the business. However, Collective Growth’s officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and have substantial experience with mergers and acquisitions. Furthermore, in analyzing the Business Combination, Collective Growth’s board of directors conducted significant due diligence on Innoviz. Collective Growth also received advice from the underwriters of the Collective Growth IPO as to the valuation of Innoviz. Based on the foregoing, Collective Growth’s board of directors concluded that its members’ collective experience and backgrounds, together with the experience and sector expertise of Collective Growth’s advisors, enabled it to make the necessary analyses and determinations regarding the Business Combination, including that the Business Combination was fair from a financial perspective to its stockholders and that Innoviz’s fair market value was at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on interest earned on the trust account) at the time of the agreement to enter into the Business Combination. There can be no assurance, however, that Collective Growth’s board of directors was correct in its assessment of the Business Combination. For a complete discussion of the factors utilized by Collective Growth’s board of directors in approving the Business Combination, see the section entitled “Proposal One—The Business Combination Proposal.”

Q: Do I have redemption rights?

A: If you are a holder of public shares, you have the right to demand that Collective Growth redeem such shares for a pro rata portion of the cash held in Collective Growth’s trust account, calculated as of two business days prior to the consummation of the Business Combination. We sometimes refer to these rights to demand redemption of the public shares as “redemption rights.”

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to 15% or more of the public shares. Accordingly, all public shares in excess of 15% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be converted.

Under the SPAC Charter, the Business Combination may not be consummated if Collective Growth has net tangible assets of less than $5,000,001 either immediately prior to or upon consummation of the Business Combination after taking into account the redemption for cash of all public shares properly demanded to be redeemed by holders of public shares.

Q: How do I exercise my redemption rights?

A: A holder of public shares may exercise redemption rights regardless of whether it votes for or against the business combination proposal or does not vote on such proposal at all, or if it is a holder of public shares on the record date. If you are a holder of public shares and wish to exercise your redemption rights, you must demand that Collective Growth convert your public shares into cash and deliver your public shares to Collective Growth’s transfer agent physically or electronically using The Depository Trust Company’s Deposit/Withdrawal at Custodian (“DWAC”) System no later than two (2) business days prior to the special meeting. Any holder of public shares seeking redemption will be entitled to a full pro rata portion of the amount then in the trust account (which, for illustrative purposes, was approximately $150,111,500, or $10.01 per share, as of the record date), less any owed but unpaid taxes on the funds in the trust account. Such amount will be paid promptly upon consummation of the Business Combination. There are currently no owed but unpaid income taxes on the funds in the trust account.

 

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Any request for redemption, once made by a holder of public shares, may be withdrawn at any time prior to the time the vote is taken with respect to the business combination proposal at the special meeting. If you deliver your shares for redemption to Collective Growth’s transfer agent and later decide prior to the special meeting not to elect redemption, you may request that Collective Growth’s transfer agent return the shares (physically or electronically). You may make such request by contacting Collective Growth’s transfer agent at the address listed at the end of this section.

Any written demand of redemption rights must be received by Collective Growth’s transfer agent at least two (2) business days prior to the vote taken on the business combination proposal at the special meeting. No demand for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to the transfer agent.

If you are a holder of public shares (including through the ownership of Collective Growth units) and you exercise your redemption rights, it will not result in the loss of any Collective Growth warrants that you may hold (including those contained in any units you hold). Your whole warrants will become exercisable to purchase one Innoviz ordinary share following consummation of the Business Combination.

Q: Do I have appraisal rights if I object to the proposed Business Combination?

A: Under Section 262 of the General Corporation Law of the State of Delaware, the holders of Collective Growth Common Stock and Collective Growth warrants will not have appraisal rights in connection with the Business Combination.

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

A: The net proceeds of the Collective Growth IPO, together with a portion of the amount raised from the simultaneous private placement of Collective Growth warrants for a total of $150,000,000, was placed in the trust account immediately following the Collective Growth IPO. After consummation of the Business Combination, the funds in the trust account will be used to pay, on a pro rata basis, holders of the public shares who exercise redemption rights, to pay fees and expenses incurred in connection with the Business Combination (including aggregate fees of approximately $5.25 million to the underwriters of the Collective Growth IPO as deferred underwriting commissions) and to develop new technology, products and services, expand internationally and for working capital and general corporate purposes.

Q: What happens if a substantial number of public stockholders vote in favor of the business combination proposal and exercise their redemption rights?

A: Collective Growth’s public stockholders may vote in favor of the Business Combination and still exercise their redemption rights, although they are not required to vote in any way to exercise such redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public stockholders are substantially reduced as a result of redemptions by public stockholders. To the extent that there are fewer public shares and public stockholders, the trading market for Innoviz’s ordinary shares may be less liquid than the market was for Collective Growth prior to the Transactions and Innoviz may not be able to meet the listing standards of a national securities exchange. In addition, to the extent of any redemptions, fewer funds from the trust account would be available to Innoviz to be used in its business following the consummation of the Business Combination.

Q: What happens if the Business Combination is not consummated?

A: If Collective Growth does not complete the Business Combination with Innoviz for whatever reason, Collective Growth would search for another target business with which to complete a business combination. If

 

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Collective Growth does not complete the Business Combination with Innoviz or another business combination by November 5, 2021 (or such later date as may be approved by Collective Growth stockholders in an amendment to the SPAC Charter), Collective Growth must redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to an amount then held in the trust account (net of taxes payable and less up to $100,000 of interest to pay dissolution expenses) divided by the number of outstanding public shares. The Sponsor and Collective Growth’s officers and directors have waived their redemption rights with respect to their sponsor shares in the event a business combination is not effected in the required time period, and, accordingly, their sponsor shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to our outstanding warrants. Accordingly, the warrants will expire worthless.

Q: How do the Sponsor and the officers and directors of Collective Growth intend to vote on the proposals?

A: The Sponsor, as well as Collective Growth’s officers and directors, beneficially own and are entitled to vote an aggregate of approximately 21.1% of the outstanding Collective Growth Common Stock. These holders have agreed to vote their shares in favor of the business combination proposal. These holders have also indicated that they intend to vote their shares in favor of all other proposals being presented at the meeting. In addition to the shares of Collective Growth Common Stock held by the Sponsor and Collective Growth’s officers and directors, Collective Growth would need 5,493,751 shares, or approximately 36.6%, of the 15,000,000 public shares sold in the Collective Growth IPO to be voted in favor of the business combination proposal and other proposals in order for them to be approved (assuming all outstanding shares are voted on each proposal).

Q: What interests do the Sponsor and the current officers and directors of Collective Growth have in the Business Combination?

A: In considering the recommendation of our board to vote in favor of the Business Combination, stockholders should be aware that, aside from their interests as stockholders, the Sponsor and certain of our directors and officers have interests in the Business Combination that are different from, or in addition to, those of other stockholders generally. Our directors were aware of and considered these interests, among other matters, in evaluating the Business Combination, in recommending to stockholders that they approve the Business Combination and in agreeing to vote their shares in favor of the Business Combination. Stockholders should take these interests into account in deciding whether to approve the Business Combination. These interests include, among other things, the fact that:

 

   

If the Business Combination with Innoviz or another business combination is not consummated by November 5, 2021 (or such later date as may be approved by Collective Growth’s stockholders), Collective Growth will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, the 3,750,000 sponsor shares held by the Sponsor and Collective Growth’s directors and officers, which were acquired for an aggregate purchase price of $25,000 prior to the Collective Growth IPO, would be worthless because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of approximately $42.0 million based upon the closing price of $11.20 per share of Class A Stock on Nasdaq on March 4, 2021, the record date. On the other hand, if the Business Combination is consummated, each outstanding share of Collective Growth Common Stock (other than the shares forfeited pursuant to the Forfeiture Agreement) will be converted into Innoviz ordinary shares at the Exchange Ratio.

 

   

The Sponsor purchased 1,875,000 private warrants from Collective Growth for $1.00 per private warrant and the Sponsor and certain of Collective Growth’s directors and officers purchased 262,500 private units from Collective Growth for $10.00 per private unit. These purchases took place on a private placement basis simultaneously with the consummation of the Collective Growth IPO. All of the proceeds Collective Growth received from these purchases were placed in the trust account. Such private warrants (including the warrants included in the private units) had an aggregate market value of

 

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approximately $5.7 million based upon the closing price of $2.66 per warrant on Nasdaq on March 4, 2021. The Class A Stock underlying the private units had an aggregate market value of approximately $2.9 million based upon the closing price of $11.20 per share of Class A Stock on Nasdaq on March 4, 2021. The private warrants (including the warrants included in the private units) and the Class A Stock underlying the private units will become worthless if Collective Growth does not consummate a business combination by November 5, 2021 (or such later date as may be approved by Collective Growth stockholders in an amendment to the SPAC Charter). On the other hand, if the Business Combination is consummated, each outstanding whole warrant will become an Innoviz warrant exercisable to purchase one Innoviz ordinary share following consummation of the Business Combination and each outstanding share of Collective Growth Common Stock (other than the shares forfeited pursuant to the Forfeiture Agreement) will be converted into Innoviz ordinary shares at the Exchange Ratio

 

   

If Collective Growth is unable to complete a business combination within the required time period, the Sponsor will be personally liable under certain circumstances described herein to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Collective Growth for services rendered or contracted for or products sold to Collective Growth. If Collective Growth consummates a business combination, on the other hand, Collective Growth will be liable for all such claims.

 

   

The Sponsor and Collective Growth’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Collective Growth’s behalf, such as identifying and investigating possible business targets and business combinations. However, if Collective Growth fails to consummate a business combination within the required period, they will not have any claim against the trust account for reimbursement. Accordingly, Collective Growth may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by November 5, 2021 (or such later date as may be approved by Collective Growth stockholders in an amendment to the SPAC Charter). As of the record date, the Sponsor and Collective Growth’s officers and directors and their affiliates had incurred approximately $252,000 of unpaid reimbursable expenses.

 

   

The Business Combination Agreement provides for the continued indemnification of Collective Growth’s current directors and officers and the continuation of directors and officers liability insurance covering Collective Growth’s current directors and officers.

 

   

Collective Growth’s officers and directors (or their affiliates) may make loans from time to time to Collective Growth to fund certain capital requirements. As of the date of this proxy statement/prospectus, no such loans have been made, but loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to Collective Growth outside of the trust account.

Q: When do you expect the Business Combination to be completed?

A: It is currently anticipated that the Business Combination will be consummated promptly following the Collective Growth special meeting, which is set for March 31, 2021; however, such meeting could be adjourned or postponed to a later date, as described above. The closing of the Transactions is also subject to the approval of the holders of Innoviz ordinary shares and Innoviz preferred shares, as well as other customary closing conditions. For a description of the conditions for the completion of the Business Combination, see the section entitled “The Business Combination Agreement—Conditions to Closing of the Transactions.

Q: What do I need to do now?

A: Collective Growth urges you to carefully read and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a

 

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stockholder and/or warrantholder of Collective Growth. Stockholders 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: When and where will the special meeting take place?

A: The special meeting will be held on March 31, 2021, at 9:00 a.m., Eastern time, solely over the Internet by means of a live audio webcast. You may attend the special meeting webcast by accessing the web portal located at https://www.cstproxy.com/collectivegrowthcorp/sm2021 and following the instructions set forth below. Stockholders participating in the special meeting will be able to listen only and will not be able to speak during the webcast. However, in order to maintain the interactive nature of the special meeting, virtual attendees will be able to:

 

   

vote via the web portal during the special meeting webcast; and

 

   

submit questions or comments to Collective Growth’s directors and officers during the special meeting via the special meeting webcast.

Stockholders may submit questions or comments during the meeting through the special meeting webcast by typing in the “Submit a question” box.

Q: How do I attend the Special Meeting?

A: Due to health concerns stemming from the COVID-19 pandemic and to support the health and well-being of our stockholders, the special meeting will be held virtually. Any stockholder wishing to attend the special meeting must register in advance. To register for and attend the special meeting, please follow these instructions as applicable to the nature of your ownership of Collective Growth Common Stock:

 

   

Shares Held of Record. If you are a record holder, and you wish to attend the virtual special meeting, go to https://www.cstproxy.com/collectivegrowthcorp/sm2021, enter the control number you received on your proxy card or notice of the meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Immediately prior to the start of the special meeting, you will need to log back into the meeting site using your control number. You must register before the meeting starts.

 

   

Shares Held in Street Name. If you hold your shares in “street” name, which means your shares are held of record by a broker, bank or nominee, and you who wish to attend the virtual special meeting, you must obtain a legal proxy from the stockholder of record and e-mail a copy (a legible photograph is sufficient) of your proxy to proxy@continentalstock.com. Holders should contact their bank, broker or other nominee for instructions regarding obtaining a proxy. Holders who e-mail a valid legal proxy will be issued a meeting control number that will allow them to register to attend and participate in the special meeting. You will receive an e-mail prior to the meeting with a link and instructions for entering the special meeting. “Street” name holders should contact Continental Stock Transfer on or before March 29, 2021.

Q: How do I vote?

A: If you are a holder of record of Collective Growth Common Stock on the record date, you may vote by virtually attending the special meeting and submitting a ballot via the special meeting webcast or by submitting a

 

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proxy for the special 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,” you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly voted and 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 virtual special meeting and vote through the web portal, obtain a legal 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: Your broker, bank or nominee can vote your shares without receiving your instructions on “routine” proposals only. Your broker, bank or nominee cannot vote your shares with respect to “non-routine” proposals unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee.

The adjournment proposal and the charter proposal to approve the name of the public company being “Innoviz Technologies Ltd.” are each considered a routine proposal. Accordingly, your broker, bank or nominee may vote your shares with respect to such proposals without receiving voting instructions.

The business combination proposal and each other charter proposal are non-routine proposals. Accordingly, your broker, bank or nominee may not vote your shares with respect to these proposals unless you provide voting instructions.

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

A: Yes. Stockholders of record may send a later-dated, signed proxy card to Collective Growth’s transfer agent at the address set forth below so that it is received prior to the vote at the special meeting or virtually attend the special meeting and submit a ballot through the web portal during the special meeting webcast. Stockholders of record also may revoke their proxy by sending a notice of revocation to Collective Growth’s transfer agent, which must be received prior to the vote at the special meeting. If you hold your shares in “street name,” you should contact your broker, bank or nominee to change your instructions on how to vote. If you hold your shares in “street name” and wish to virtually attend the special meeting and vote through the web portal, you must obtain a legal proxy from your broker, bank or nominee.

Q: What constitutes a quorum for the special meeting?

A: A quorum is the minimum number of shares of Collective Growth Common Stock that must be present to hold a valid meeting. A quorum will be present at the Collective Growth special meeting if a majority of all the outstanding shares of Collective Growth Common Stock entitled to vote at the meeting are represented at the virtual special meeting or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum. The Class A Stock and Class B Stock are entitled vote together as a single class on all matters to be considered at the special meeting.

Q: What stockholder vote thresholds are required for the approval of each proposal brought before the special meeting?

 

   

Business Combination Proposal—The approval of the business combination proposal will require the affirmative vote of the holders of a majority of the then outstanding shares of Collective Growth Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” the business combination proposal. Brokers are not entitled to vote on the business combination proposal absent voting instructions from the beneficial holder and, consequently, broker non-votes will have no effect on the business combination proposal. The Transactions will not

 

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be consummated if Collective Growth has less than $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act) either immediately prior to or upon consummation of the Transactions.

 

   

Charter Proposals—The approval of each of the charter proposals will require the affirmative vote of the holders of a majority of the Collective Growth Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” the charter proposals. The charter proposal to approve “Innoviz Technologies Ltd.” as the name of the new public entity is a routine proposal and, accordingly, your broker, bank or nominee may vote your shares with respect to such proposal without receiving voting instructions. Consequently, there should be no broker non-votes with respect to such proposal. Each other charter proposal is considered a non-routine proposal, and, accordingly, brokers are not entitled to vote on those proposals without receiving voting instructions, and broker non-votes will have no effect with respect to such proposals.

 

   

Adjournment Proposal—The approval of the adjournment proposal will require the affirmative vote of the holders of a majority of the shares of Collective Growth Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” the adjournment proposal. Brokers are entitled to vote on the adjournment proposal absent voting instructions from the beneficial holder because the proposal is considered “routine”. Consequently, there should be no broker non-votes with respect to the adjournment proposal.

Q: What happens if I fail to take any action with respect to the special meeting?

A: If you fail to take any action with respect to the meeting and the Business Combination is approved by the Collective Growth stockholders and consummated, you will become a shareholder or warrant holder of Innoviz.

If you fail to take any action with respect to the special meeting and the Business Combination is not approved, you will continue to be a stockholder and/or warrant holder of Collective Growth, as applicable, and Collective Growth will continue to search for another target business with which to complete an initial business combination. If Collective Growth does not complete an initial business combination by November 5, 2021 (or such later date as may be approved by Collective Growth stockholders in an amendment to the SPAC Charter), Collective Growth must cease all operations except for the purpose of winding up, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to an amount then held in the trust account (net of taxes payable and less up to $100,000 of interest to pay dissolution expenses), and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate.

Q: What should I do with my share and/or warrant certificates?

A: Warrant holders and those stockholders who do not elect to have their shares of Collective Growth Common Stock redeemed for a pro rata share of the trust account should wait for instructions from Collective Growth’s transfer agent regarding what to do with their certificates. Collective Growth stockholders who exercise their redemption rights must deliver their share certificates to Collective Growth’s transfer agent (either physically or electronically) no later than two (2) business days prior to the special meeting as described above.

Upon consummation of the Transactions, the Collective Growth warrants, by their terms, will entitle holders to purchase shares of Innoviz. Therefore, warrantholders need not deliver their warrants to Collective Growth or Innoviz at that time.

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

A: Stockholders 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

 

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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 shares of Collective Growth Common Stock.

Q: Who can help answer my questions?

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

Collective Growth Corporation

1805 West Avenue

Austin, TX 78701

Tel: 613-799-1110

Attn: Wilson Kello, Chief Marketing Officer

Email: wilson@collectivegrowthcorp.com

or the proxy solicitor at:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Telephone Toll Free: (800) 515-4479

You may also obtain additional information about Collective Growth 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 shares, you will need to deliver your shares (either physically or electronically) to Collective Growth’s transfer agent at the address below at least two (2) business days prior to the vote at the special meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Mr. Mark Zimkind

Continental Stock Transfer & Trust Company

1 State Street, 30th Floor

New York, New York 10004

E-mail: mzimkind@continentalstock.com

 

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SUMMARY

This summary highlights selected information from this proxy statement/prospectus. It may not contain all of the information that is important to you. You should carefully read the entire proxy statement/prospectus and the other documents referred to in this proxy statement/prospectus, including the annexes and exhibits, to fully understand the Business Combination Agreement, the Business Combination and the other matters being considered at the special meeting of Collective Growth stockholders. For additional information, see “Where You Can Find More Information” beginning on page 230. Each item in this summary refers to the page of this proxy statement/prospectus on which that subject is discussed in more detail.

Information About the Companies

Innoviz Technologies Ltd.

Innoviz is a leading provider of high-performance, solid-state LiDAR and perception solutions that bring enhanced vision and superior performance to enable safe autonomous driving at a mass scale. We believe that Innoviz provides a complete and comprehensive solution for automotive original equipment manufacturers (“OEMs”) and Tier-1 partners that are developing and marketing autonomous driving vehicles to the passenger car and other relevant markets, such as robotaxis, shuttles and trucking. Innoviz’s unique LiDAR and perception solutions, which feature technological breakthroughs across core components, have propelled Innoviz to the first Level 3 LiDAR Automotive series production contract in its industry. In addition, Innoviz’s solutions can enable safe autonomy for other industries, including drones, robotics and mapping.

Innoviz was founded in 2016 by veterans of Unit 81, the elite technology unit of Israel’s Intelligence Corps, one of the most prestigious multidisciplinary technological units in the Israeli Defense Forces. From its founding, Innoviz’s culture drew from Unit 81’s core values of solving sophisticated technological problems through creativity and agile thinking in order to address the needs of autonomous vehicles in a manner that strikes the desired balance between performance and cost. Innoviz created a new type of LiDAR sensor from the chip-level up, including a suite of powerful and sophisticated software applications for high-performance computer vision to allow superior perception. Innoviz’s multidisciplinary team developed an operational MEMS-based (Micro-Electro Mechanical System) LiDAR prototype in less than a year, which then attracted the attention of leading Tier-1 companies such as Magna and Aptiv already in 2017. This was followed by a rigorous further development and qualification stage, culminating in Innoviz achieving a design win with BMW in 2018 to power BMW’s Level 3 autonomous platform. BMW is a leader and a pioneer in deploying new technologies into the automotive industry and it is the first OEM worldwide to incorporate a LiDAR for a Level 3 autonomous driving configuration in mass commercialization program. Innoviz therefore believes that its close cooperation with BMW and its Tier-1 partner Magna uniquely positions Innoviz to make Level 3 autonomous driving a commercial reality.

The mailing address of Innoviz’s principal executive office is 2 Amal Street, Afek Industrial Park, Rosh HaAin, Israel 4809202 and its telephone number is +972-74-700-3692.

Collective Growth Corporation

Collective Growth Corporation was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. Collective Growth was incorporated under the laws of the State of Delaware on December 10, 2019.

On May 5, 2020, Collective Growth closed its initial public offering of 15,000,000 units, with each unit consisting of one share of Class A Stock and one-half of one redeemable warrant, with each whole warrant entitling the holder to purchase one share of Class A Stock at a price of $11.50 commencing 30 days after the consummation of an initial business combination.



 

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Collective Growth’s units, the Class A Stock and the Collective Growth warrants are listed on the Nasdaq under the symbols CGROU, CGRO and CGROW, respectively.

The mailing address of Collective Growth’s principal executive office is 1805 West Avenue, Austin, Texas 78701, and its telephone number is (613) 799-1110. After the consummation of the Business Combination, Collective Growth’s principal executive office will be that of Innoviz.

Hatzata Merger Sub, Inc.

Hatzata Merger Sub, Inc. (“Merger Sub”) is a newly formed Delaware corporation and a wholly owned subsidiary of Innoviz. Merger Sub was formed solely for the purpose of effecting the Transactions and has not carried on any activities other than those in connection with the Transactions. The address and telephone number for Merger Sub’s principal executive offices are the same as those for Innoviz.

The Business Combination Agreement (page 81)

The terms and conditions of the merger of Merger Sub with and into Collective Growth, with Collective Growth surviving the merger as a wholly owned subsidiary of Innoviz (the “Business Combination”) are contained in the Business Combination Agreement, which is attached as Annex A to this proxy statement/prospectus. We encourage you to read the Business Combination Agreement carefully, as it is the legal document that governs the Business Combination.

Merger Consideration

The pro forma equity valuation of the Company upon consummation of the Transactions is estimated to approximate $1,405,000,000. We estimate that, upon consummation of the Transactions (the “Effective Time”), without giving effect to the issuance of Earnout Shares (defined below) and assuming none of Collective Growth’s public stockholders demand redemption (“SPAC Redemptions”) pursuant to the SPAC Charter, the securityholders of Innoviz and certain members of Innoviz management receiving shares in the Transactions (“Company Management”) will own more than 75% of the outstanding Innoviz ordinary shares and the securityholders of Collective Growth, Perception, Antara, and certain accredited investors purchasing PIPE Shares will own the remaining Innoviz ordinary shares.

Pursuant to the Business Combination Agreement, at the Effective Time (a) each share of Class A Common Stock of Collective Growth, par value $0.0001 per share (“Class A Stock”), outstanding immediately prior to the Effective Time will be exchanged for one Innoviz ordinary share (the “Exchange Ratio”), (b) each share of Class B Common Stock of Collective Growth, par value $0.0001 per share (“Class B Stock” and, together with the Class A Stock, the “Collective Growth Common Stock”), outstanding immediately prior to the Effective Time, after giving effect to the forfeiture of 1,875,000 shares of Class B Stock pursuant to that certain letter agreement dated December 10, 2020, by and among Collective Growth and certain holders of Class B Stock (the “Forfeiture Agreement”), will be exchanged for one Innoviz ordinary share, (c) each warrant of Collective Growth entitling the holder to purchase one share of Class A Stock per warrant at a price of $11.50 per share (each, a “Collective Growth warrant”) outstanding immediately prior to the Effective Time, after giving effect to the forfeiture of 187,500 Collective Growth warrants pursuant to the Forfeiture Agreement, will be assumed by Innoviz and will become a warrant of Innoviz (“Innoviz warrant”), with the number of Innoviz ordinary shares underlying the Innoviz warrants and the exercise price of such Innoviz warrants subject to adjustment in accordance with the Business Combination Agreement, (d) Innoviz will issue to Perception Capital Partners LLC (“Perception”) 3,027,747 Innoviz warrants, (e) each outstanding Innoviz preferred share will be converted into one Innoviz ordinary share and (f) Innoviz will issue to certain members of the Company’s management (“Company Management”) 2,500,000 Innoviz ordinary shares and 3,500,000 Innoviz warrants, in each case less any applicable withholding taxes.



 

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In addition, pursuant to the Business Combination Agreement, if the trading price of the Innoviz ordinary shares on the Nasdaq Capital Market (“Nasdaq”) is greater than $12.50 (the “Earnout Target”) for any period of ten (10) trading days out of a twenty (20) consecutive trading-days at any time after the closing of the Transactions until the fourth anniversary of the date of the closing of the Transactions, (i) Innoviz will issue to Perception up to 2,175,000 Innoviz ordinary shares (“Perception Earnout Shares”) as additional consideration for services provided by Perception to Innoviz, with the number of Innoviz ordinary shares to be issued to Perception to be calculated based on the amount of Initial Transaction Proceeds (as defined herein), and (ii) Innoviz will issue to Company Management 1,250,000 Innoviz ordinary shares, in each case less any applicable withholding taxes.

Concurrently with the execution of the Business Combination Agreement, Innoviz and Antara Capital entered into a put option agreement (“Put Option Agreement”) pursuant to which Innoviz caused Antara Capital to subscribe for a number of Innoviz ordinary shares in the PIPE with an aggregate equity value equal to $70,000,000 pursuant to the Put Share Subscription Agreement. In consideration for entering into the Put Option Agreement, Innoviz agreed to issue to Antara Capital Master 3,784,753 Innoviz warrants and up to 3,125,000 Innoviz ordinary shares, with the number of Innoviz ordinary shares to be issued to Antara Capital Master to be calculated based on the amount of Initial Transaction Proceeds. If Innoviz issues to Perception the Perception Earnout Shares, then Innoviz will also issue to Antara Capital Master up to an additional 325,000 Innoviz ordinary shares, with the number of Innoviz ordinary shares to be issued to Antara Capital Master to be calculated based on the amount of Initial Transaction Proceeds (the “Antara Earnout Shares”).

Adjustments to Merger Consideration

On February 17, 2021, Innoviz effected a reverse stock split to cause the value of the outstanding Innoviz ordinary shares immediately prior to the Effective Time to equal $10.00 per share (the “Stock Split”).

The Collective Growth Board’s Reasons for the Business Combination

In evaluating the Business Combination, Collective Growth’s board of directors consulted with Collective Growth’s management and legal and financial advisors. Collective Growth’s board of directors reviewed various industry and financial data in order to determine that the consideration to be paid was reasonable and that the Business Combination was in the best interests of Collective Growth’s stockholders. The financial data reviewed included the historical and projected consolidated financial statements of Innoviz, comparable publicly traded company analyses and an analysis of pro forma capital structure and trading multiples prepared by management and Collective Growth’s advisors.

Collective Growth’s management conducted a due diligence review of Innoviz that included an industry analysis, an analysis of the existing business model of Innoviz and historical and projected financial results. Collective Growth’s management, including its directors and advisors, have many years of experience in both operational management and investment and financial management and analysis and, in the opinion of Collective Growth’s board of directors, was suitably qualified to conduct the due diligence and other investigations and analyses required in connection with the search for a business combination partner. A detailed description of the experience of Collective Growth’s executive officers and directors is included in the section of this proxy statement/prospectus entitled “Collective Growth’s Business—Directors and Executive Officers.”

In reaching its unanimous resolution (i) that the terms and conditions of the Business Combination Agreement, including the proposed Business Combination, are advisable, fair to and in the best interests of



 

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Collective Growth and its stockholders and (ii) to recommend that its stockholders adopt and approve the Business Combination Agreement and approve the Business Combination contemplated therein, Collective Growth’s board of directors considered a range of factors, including but not limited to, the factors discussed below. In light of the number and wide variety of factors, Collective Growth’s board of directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its determination. Collective Growth’s board of directors viewed its position as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of Collective Growth’s reasons for the Business Combination and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the section of this proxy statement/prospectus entitled “Cautionary Statement Regarding Forward-Looking Statements; Market, Ranking and Other Industry Data.”

In considering the Business Combination, Collective Growth’s board of directors gave considerable weight to the following factors:

 

   

Unique Market Position. Innoviz is well-positioned to take advantage of the dramatic adoption of its next generation, cost-effective LiDAR-based perception software and solid-state systems over the next five to ten years with the only current certified automotive-grade higher performance LiDAR system on the market today, and Innoviz projects revenue in the near term of $9 million in 2021, $23 million in 2022 and $79 million in 2023 through its key strategic Tier-1 relationships (see “Proposal One—The Business Combination Proposal—Unaudited Prospective Financial Information of Innoviz” for additional information);

 

   

Existing Customer and Supplier Relationships. Innoviz has established key strategic relationships with Tier-1 customers and suppliers to validate Innoviz’s position and potential for early, mass commercial adoption of its high quality and safe Level 3 LiDAR while developing next-generation Level 2+ with Innoviz’s Tier-1 partners across U.S., Europe and China;

 

   

Experienced Leadership Team with a Proven Track Record. Innoviz is led by an experienced management team in Innoviz’s industry;

 

   

Platform for Future Development and Expansion. A public company status, combined with the capital to be provided from the PIPE and expected to be provided from Collective Growth’s trust, is expected to provide Innoviz with an optimal platform for further developing and expanding its current programs of Level 2+ and Level 3, and even Level 4 LiDAR systems and software;

 

   

Attractive Valuation. Collective Growth’s board of directors believes Innoviz’s implied valuation following the Business Combination relative to the current valuations experienced by comparable publicly traded companies in the LiDAR sector is favorable for Collective Growth;

 

   

Due Diligence. Collective Growth’s due diligence examinations of Innoviz and discussions with Innoviz’s management, strategic investor, financial and legal advisors;

 

   

Other Alternatives. Collective Growth’s board of directors believes, after a thorough review of other business combination opportunities reasonably available to Collective Growth, that the Business Combination represents the best potential business combination for Collective Growth and the most attractive opportunity for Collective Growth based upon the process utilized to evaluate and assess other potential combination targets, and Collective Growth’s board of directors’ belief that such process has not presented a better alternative; and

 

   

Negotiated Transaction. The financial and other terms of the Business Combination Agreement and the fact that such terms and conditions are reasonable and were the product of arm’s length negotiations between Collective Growth and Innoviz.



 

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Collective Growth’s board of directors also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:

 

   

Market Adoption. Whether the adoption of autonomous cars will occur and be widespread, and whether such adoption will rely on LiDAR rather than another technology;

 

   

Systems Update. The need to update Innoviz’s financial systems and operations necessary for a public company;

 

   

Competition. Competition in Innoviz’s industry is intense, which may cause reductions in the price Innoviz can charge for its products and services, thereby potentially lowering Innoviz’s profits;

 

   

Loss of Key Personnel. Key personnel in Innoviz’s industry is vital and competition for such personnel is intense. The loss of any key personnel could be detrimental to Innoviz’s operations;

 

   

Macroeconomic Risks. Macroeconomic uncertainty and the effects it could have on the combined company’s revenues;

 

   

Benefits Not Achieved. The risk that the potential benefits of the Business Combination may not be fully achieved or may not be achieved within the expected timeframe;

 

   

Collective Growth Stockholders Receiving Minority Position. The fact that existing Collective Growth stockholders will hold a minority position in the combined company; and

 

   

Other Risks. Various other risks associated with Innoviz’s business, as described in the section entitled “Risk Factors” appearing elsewhere in this proxy statement/prospectus.

Collective Growth’s board of directors concluded that the potential benefits that it expected Collective Growth and its stockholders to achieve as a result of the Business Combination outweighed the potentially negative factors associated with the Business Combination. Accordingly, Collective Growth’s board of directors unanimously determined that the Business Combination Agreement and the Business Combination contemplated therein were advisable, fair to and in the best interests of Collective Growth and its stockholders.

Interests of Collective Growth’s Officers and Directors in the Transactions (page 60)

In considering the recommendation of Collective Growth’s board of directors to vote in favor of approval of the business combination proposal and the charter proposals, stockholders should keep in mind that the Sponsor and Collective Growth’s directors and executive officers have interests in such proposals that are different from, or in addition to, those of Collective Growth’s stockholders generally. In particular:

 

   

If the Business Combination with Innoviz or another business combination is not consummated by November 5, 2021 (or such later date as may be approved by Collective Growth’s stockholders), Collective Growth will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, the 3,750,000 sponsor shares held by the Sponsor and Collective Growth’s directors and officers, which were acquired for an aggregate purchase price of $25,000 prior to the Collective Growth IPO, would be worthless because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of approximately $42.0 million based upon the closing price of $11.20 per share of Class A Stock on Nasdaq on March 4, 2021, the record date. On the other hand, if the Business Combination is consummated, each outstanding share of Collective Growth Common Stock (other than the shares forfeited pursuant to the Forfeiture Agreement) will be converted into Innoviz ordinary shares at the Exchange Ratio.

 

   

The Sponsor purchased 1,875,000 private warrants from Collective Growth for $1.00 per private warrant and the Sponsor and certain of Collective Growth’s directors and officers purchased 262,500



 

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private units from Collective Growth for $10.00 per private unit. These purchases took place on a private placement basis simultaneously with the consummation of the Collective Growth IPO. All of the proceeds Collective Growth received from these purchases were placed in the trust account. Such private warrants (including the warrants included in the private units) had an aggregate market value of approximately $5.7 million based upon the closing price of $2.66 per warrant on Nasdaq on March 4, 2021 and the Class A Stock underlying the private units had an aggregate market value of approximately $2.9 million based upon the closing price of $11.20 per share of Class A Stock on Nasdaq on March 4, 2021. The private warrants (including the warrants included in the private units) and the Class A Stock underlying the private units will become worthless if Collective Growth does not consummate a business combination by November 5, 2021 (or such later date as may be approved by Collective Growth stockholders in an amendment to the SPAC Charter). On the other hand, if the Business Combination is consummated, each outstanding whole warrant will become an Innoviz warrant exercisable to purchase one Innoviz ordinary share following consummation of the Business Combination and each outstanding share of Collective Growth Common Stock (other than the shares forfeited pursuant to the Forfeiture Agreement) will be converted into Innoviz ordinary shares at the Exchange Ratio.

 

   

If Collective Growth is unable to complete a business combination within the required time period, the Sponsor will be personally liable under certain circumstances described herein to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Collective Growth for services rendered or contracted for or products sold to Collective Growth. If Collective Growth consummates a business combination, on the other hand, Collective Growth will be liable for all such claims.

 

   

The Sponsor and Collective Growth’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Collective Growth’s behalf, such as identifying and investigating possible business targets and business combinations. However, if Collective Growth fails to consummate a business combination within the required period, they will not have any claim against the trust account for reimbursement. Accordingly, Collective Growth may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by November 5, 2021 (or such later date as may be approved by Collective Growth stockholders in an amendment to the SPAC Charter). As of the record date, the Sponsor and Collective Growth’s officers and directors and their affiliates had incurred approximately $252,000 of unpaid reimbursable expenses.

 

   

The Business Combination Agreement provides for the continued indemnification of Collective Growth’s current directors and officers and the continuation of directors and officers liability insurance covering Collective Growth’s current directors and officers.

 

   

Collective Growth’s officers and directors (or their affiliates) may make loans from time to time to Collective Growth to fund certain capital requirements. Such loans may be repaid at the Closing or, in the option of the holder, up to $750,000 of such loans may be converted into Collective Growth warrants immediately prior to the Closing at a price of $1.00 per warrant and up to $750,000 of such loans may be converted into Collective Growth units at a price of $10.00 per unit. As of the date of this proxy statement/prospectus, an aggregate of $100,000 in such loans were made by the Sponsor. Additional loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to Collective Growth outside of the trust account.

Agreements entered into in connection with the Business Combination Agreement (page 91)

Subscription Agreements

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collectively, the “Subscription Agreements”) with certain parties subscribing for Innoviz ordinary shares (the “PIPE Investors”), pursuant to which the PIPE Investors have agreed to purchase, and Innoviz has agreed to sell the PIPE Investors, an aggregate of 23,000,000 Innoviz ordinary shares, for a purchase price of $10.00 per share and at an aggregate purchase price of $230,000,000. The obligations to consummate the transactions contemplated by the Subscription Agreements are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Business Combination Agreement. The Subscription Agreements include customary resale registration rights provisions.

Support Agreements

Concurrently with the execution of the Business Combination Agreement, Innoviz and Collective Growth entered into a support agreement (each, a “Support Agreement” and collectively, the “Support Agreements”) with certain shareholders of Innoviz (each, a “Supporting Innoviz Shareholder” and collectively, the “Supporting Innoviz Shareholders”) that collectively hold Innoviz ordinary shares and Innoviz preferred shares representing the majority of the voting power of the Innoviz ordinary shares and 60% of the voting power of the Innoviz preferred shares, including more than 50% of the Series C Preferred Shares and 50% of the Series C-1 Preferred Shares (voting together). Each Support Agreement provides, among other things, that each Supporting Innoviz Shareholder will (i) vote all Innoviz ordinary shares and Innoviz preferred shares beneficially owned by them in favor of the Business Combination and each other proposal related to the Business Combination on the agenda at the meeting of Innoviz shareholders called to approve the Business Combination, (ii) appear at such shareholder meeting for the purpose of establishing a quorum, (iii) vote all such shares against any action that would reasonably be expected to materially impede, interfere with, delay, postpone, or adversely affect the Transactions and (iv) not transfer, assign, or sell such shares, except to certain permitted transferees, prior to the consummation of the Transactions.

Registration Rights Agreement

Concurrently with the execution of the Business Combination Agreement, Innoviz, certain equityholders of Innoviz, certain equityholders of Collective Growth, Perception and Antara Capital entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which Innoviz agreed to file a shelf registration statement with respect to the registrable securities defined therein within sixty (60) days of the closing of the Transactions. Certain holders of registrable securities under the Registration Rights Agreement may request to sell all or any portion of their registrable securities in an underwritten offering up to twice in any 12-month period so long as the total offering price is reasonably expected to exceed $75,000,000. Innoviz also agreed to provide customary “piggyback” registration rights. The Registration Rights Agreement also provides that Innoviz will pay certain expenses relating to such registrations and indemnify the shareholders against certain liabilities. The Registration Rights Agreement does not contemplate the payment of penalties or liquidated damages to the equityholders party thereto as a result of a failure to register, or delays with respect to the registration of, the registrable securities.

Confidentiality and Lockup Agreement

Concurrently with the execution of the Business Combination Agreement, Innoviz certain equityholders of Innoviz, certain equityholders of Collective Growth, Perception and Antara Capital entered into a confidentiality and lockup agreement (the “Confidentiality and Lockup Agreement”). Pursuant to the Confidentiality and Lockup Agreement, such shareholders have agreed that they will not, during the period beginning at the Effective Time and continuing to and including the date that is one hundred eighty (180) days after the date of closing of the Business Combination, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares, or any options or warrants to purchase any shares, or any securities convertible into, exchangeable for or that represent the right to receive shares, or any interest in any of



 

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the foregoing, whether now owned or hereinafter acquired, owned directly by such shareholder (including holding as a custodian) or with respect to which such shareholder has beneficial ownership within the rules and regulations of the SEC (in each case, subject to certain exceptions set forth in the Confidentiality and Lockup Agreement).

In connection with the Confidentiality and Lockup Agreement, at the Effective Time, the transfer restrictions set forth in certain letter agreements among Collective Growth and the Sponsor and officers and directors of Collective Growth will terminate.

Assignment, Assumption and Amendment Agreement

Upon the closing of the Business Combination, Innoviz, Collective Growth and Continental Stock Transfer & Trust Company (“Continental”) will enter into an assignment, assumption and amendment agreement (the “Warrant Agreement Amendment”). Such agreement will amend that certain Warrant Agreement, dated as of April 30, 2020, between Collective Growth and Continental (the “Existing Warrant Agreement”), to provide for the assignment by Collective Growth of all its rights, title and interest in the outstanding warrants of Collective Growth to Innoviz. Pursuant to the Warrant Agreement Amendment, all Collective Growth warrants under the Existing Warrant Agreement will no longer be exercisable for shares of Class A Stock, but instead will be exercisable for Innoviz ordinary shares.

Sponsor Letter Agreement

Concurrently with the execution of the Business Combination Agreement, the Sponsors and officers and directors of Collective Growth entered into a letter agreement (“Sponsor Letter Agreement”) in favor of Innoviz and Collective Growth, pursuant to which they agreed to (i) vote all shares of Collective Growth Common Stock beneficially owned by them in favor of the Business Combination and each other proposal related to the Business Combination on the agenda at the meeting of Collective Growth stockholders called to approve the Business Combination, (ii) appear at such stockholder meeting for the purpose of establishing a quorum, (iii) vote all such shares against any action that would reasonably be expected to materially impede, interfere with, delay, postpone, or adversely affect the Transactions and (iv) not transfer, assign, or sell such shares, except to certain permitted transferees, prior to the consummation of the Transactions.

Forfeiture Agreement

Concurrently with the execution of the Business Combination Agreement, the Sponsor and officers and directors of Collective Growth entered into a Forfeiture Agreement in favor of Innoviz and Collective Growth, pursuant to which they agreed to forfeit an aggregate of 1,875,000 shares of Class B Stock and 187,500 Collective Growth warrants for cancellation in exchange for no consideration at the Effective Time (the “Forfeiture”).

Put Option Agreement

Concurrently with the execution of the Business Combination Agreement, Innoviz and Antara Capital entered into the Put Option Agreement, pursuant to which Innoviz caused Antara to subscribe for a number of Innoviz ordinary shares in the PIPE with an aggregate equity value equal to $70,000,000 pursuant to the Put Share Subscription Agreement. In consideration for entering into the Put Option Agreement, at the Effective Time, Innoviz agreed to issue to Antara Capital Master 3,784,753 Innoviz warrants and up to 3,125,000 Innoviz ordinary shares, with the number of Innoviz ordinary shares to be issued to Antara Capital Master to be calculated based on the amount of Initial Transaction Proceeds. If Innoviz issues to Perception the Perception Earnout Shares, then Innoviz will also issue to Antara Capital Master the Antara Earnout Shares, with the number of Innoviz ordinary shares to be issued to Antara to be calculated based on the amount of Initial Transaction Proceeds.



 

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Material U.S. Federal Income Tax Considerations (page 93)

For a description of U.S. federal income tax consequences of the Business Combination, the exercise of redemption rights in respect of shares of Collective Growth Common Stock and the ownership and disposition of Innoviz ordinary shares and/or Innoviz warrants, please see the information set forth in “Material U.S. Federal Income Tax Considerations” beginning on page 93.

Material Israeli Tax Considerations (page 107)

For a description of Israeli tax consequences of the ownership and disposition of Innoviz ordinary shares and/or Innoviz warrants, please see the information set forth in “Material Israeli Tax Considerations” beginning on page 107.

Conversion Rights

Pursuant to the SPAC Charter, a holder of public shares may demand that Collective Growth convert such shares into cash if the business combination is consummated; provided that Collective Growth may not consummate the business combination if it has less than $5,000,001 of net tangible assets either immediately prior to or upon consummation of the business combination. Holders of public shares will be entitled to receive cash for these shares only if they deliver their shares to Collective Growth’s transfer agent no later than two (2) business days prior to the special meeting. Holders of public shares do not need to affirmatively vote on the business combination proposal or be a holder of such public shares as of the record date to exercise conversion rights. If the Business Combination is not consummated, these shares will not be converted into cash. If a holder of public shares properly demands conversion, delivers his, her or its shares to Collective Growth’s transfer agent as described above, and the Business Combination is consummated, Collective Growth will convert each public share into a full pro rata portion of the trust account, calculated as of two (2) business days prior to the date of the special meeting. It is anticipated that this would amount to approximately $10.01 per share. If a holder of public shares exercises his, her or its conversion rights, then it will be exchanging its shares of Collective Growth Common Stock for cash and will not become a shareholder of Innoviz. See the section of this proxy statement/prospectus titled “Special Meeting of Collective Growth Stockholders—Conversion Rights” for a detailed description of the procedures to be followed if you wish to convert your shares into cash.

Holders of Collective Growth warrants do not have conversion rights with respect to such securities.

Appraisal Rights

Collective Growth stockholders and holders of Collective Growth warrants do not have appraisal rights in connection with the Transactions under the DGCL. See the section of this proxy statement/prospectus titled “Special Meeting of Collective Growth Stockholders—Appraisal Rights.”

Voting Power; Record Date

Collective Growth stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned Class A Stock at the close of business on March 4, 2021, which is the record date for the special meeting. Collective Growth stockholders will have one vote for each share of Collective Growth Common Stock 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. Collective Growth warrants do not have voting rights. On the record date, there were 19,012,500 shares of Collective Growth Common Stock outstanding, of which 15,000,000 were public shares with the rest being held by the Collective Growth board of directors, Collective Growth’s officers and other initial stockholders and their respective affiliates (including the Sponsor).



 

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The Charter Proposals

The Collective Growth stockholders will vote on separate proposals to approve the following material differences between the SPAC Charter and Innoviz Articles to be effective upon the consummation of the Business Combination: (i) the name of the new public entity will be “Innoviz Technologies Ltd.” as opposed to “Collective Growth Corporation”; (ii) the Innoviz Articles provide for one class of ordinary shares as opposed to the two classes of Collective Growth Common Stock provided for in the SPAC Charter; (iii) Innoviz’s corporate existence is perpetual as opposed to Collective Growth’s corporate existence terminating if a business combination is not consummated within a specified period of time; and (iv) the Innoviz Articles do not include the various provisions applicable only to special purpose acquisition corporations that the SPAC Charter contains. The Innoviz Articles to be in effect upon consummation of the Business Combination is attached as Annex B to this proxy statement/prospectus. See the section of this proxy statement/prospectus titled “Proposal Two—The Charter Proposals.”

The Adjournment Proposal

If Collective Growth is unable to consummate the Business Combination at the time of the special meeting for any reason, the chairman presiding over the special meeting may submit a proposal to adjourn the special meeting to a later date or dates, if necessary. See the section of this proxy statement/prospectus titled “Proposal Three—The Adjournment Proposal.”

Recommendation to Collective Growth Stockholders

Collective Growth’s board of directors has determined that each of the proposals outlined above is fair to and in the best interests of Collective Growth and its stockholders and recommended that Collective Growth stockholders vote “FOR” the business combination proposal, “FOR” each of the charter proposals, and “FOR” the adjournment proposal, if presented.

Comparison of Rights of Stockholders of Collective Growth and Shareholders of Innoviz (page 211)

If the Business Combination is successfully completed, holders of Collective Growth Common Stock will become holders of Innoviz ordinary shares, and their rights as shareholders will be governed by Innoviz’s organizational documents. There are also differences between the laws governing Collective Growth, a Delaware corporation, and Innoviz, an Israeli company, including, among other things, additional demand rights given to shareholders to call special meetings under the The Israeli Companies Law, 5759-1999 (the “Companies Law”), a prohibition on shareholder consents by written consent under the Companies Law, and a lower quorum requirement for holding shareholder meetings under the Companies Law. For more information, please see “Comparison of Rights of Innoviz Shareholders and Collective Growth Stockholders” on page 211 for more information.

Emerging Growth Company

Each of Collective Growth and Innoviz is, and consequently, following the Business Combination, the combined company will be, an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, the combined company will be eligible to 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 of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in their 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. If some investors find the combined company’s securities less attractive as a result, there may be a less active trading market for the combined company’s securities and the prices of the combined company’s securities may be more volatile.



 

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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. The combined company 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, the combined company, 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 the combined company’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

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

Regulatory Matters

The Business Combination is not subject to any federal or state regulatory requirement or approval, except for the filing of required notifications and the expiration or termination of the required waiting periods under the HSR Act and filings with the State of Delaware necessary to effectuate the Business Combination.

Summary Risk Factors (page 15)

You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the risk factors described under “Risk Factors” beginning on page 15. Such risks include, but are not limited to:

 

   

Innoviz is an early stage company with a history of losses, and expects to incur significant expenses and continuing losses for the foreseeable future;

 

   

Innoviz’s limited operating history and evolving business model makes evaluating its business and future prospects difficult and may increase the risk of your investment;

 

   

Innoviz is creating innovative technology by designing and developing unique components. The high price of or low yield in these components may affect Innoviz’s ability to sell at competitive prices, or may lead to losses;

 

   

Innoviz expects to invest substantially in research and development for the purpose of developing and commercializing new products, and these investments could significantly reduce its profitability or increase its losses and may not generate revenue for Innoviz;

 

   

Innoviz may experience significant delays in the design, production and launch of its LiDAR products for autonomous driving systems, which could harm its business, prospects, financial condition and operating results;

 

   

Innoviz is substantially dependent on its design win with BMW and its relationship with Magna, and its business could be materially and adversely affected if the BMW L3 Program was terminated



 

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The period of time from a design win to implementation is long and Innoviz is subject to the risks of not achieving design wins, cancellation or postponement of contracts or unsuccessful implementation;

 

   

Innoviz may need to raise additional funds in the future in order to execute its business plan and these funds may not be available to Innoviz when it needs them. If Innoviz cannot raise additional funds when it needs them, its business, prospects, financial condition and operating results could be negatively affected;

 

   

If market adoption of LiDAR for autonomous vehicles does not continue to develop, or develops more slowly than Innoviz expects, its business will be adversely affected;

 

   

Innoviz targets many customers that are large companies with substantial negotiating power, exacting product standards and potentially competitive internal solutions. If Innoviz is unable to sell its products to these customers, its prospects and results of operations will be adversely affected;

 

   

Innoviz continues to implement strategic initiatives designed to grow its business. These initiatives may prove more costly than it currently anticipates and Innoviz may not succeed in increasing its revenue in an amount sufficient to offset the costs of these initiatives and to achieve and maintain profitability;

 

   

The markets in which Innoviz competes are characterized by rapid technological change, which requires Innoviz to continue to develop new products and product innovations, and could adversely affect market adoption of its products;

 

   

Certain of Innoviz’s strategic, development and supply arrangements could be terminated or may not materialize into long-term contract partnership arrangements;

 

   

Innoviz may experience difficulties in managing its growth and expanding its operations;

 

   

Continued pricing pressures, automotive OEM cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle or technology programs may result in lower than anticipated margins, or losses, which may adversely affect Innoviz’s business;

 

   

If Collective Growth’s stockholders fail to properly demand conversion rights, they will not be entitled to convert their Collective Growth Common Stock into a pro rata portion of Collective Growth’s trust account;

 

   

The Collective Growth board of directors did not obtain a third-party fairness opinion in determining whether or not to proceed with the Business Combination;

 

   

The financial and other interests of the Collective Growth board of directors may have influenced the board’s decision to approve the Business Combination;

 

   

The Innoviz securities to be received by Collective Growth’s securityholders as a result of the Business Combination will have different rights from Collective Growth securities and Collective Growth’s stockholders will have a reduced ownership and voting interest of the combined company after consummation of the Business Combination; and

 

   

The other matters described in the section titled “Risk Factors” beginning on page 15.



 

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UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA OF COLLECTIVE GROWTH AND INNOVIZ

The following table sets forth summary historical comparative share and unit information for Collective Growth and Innoviz and unaudited pro forma condensed combined per share information of Collective Growth after giving effect to the Transactions (as defined in the section titled “Unaudited Pro Forma Condensed Combined Financial Information”), assuming two redemption scenarios as follows:

 

   

Assuming No Redemptions: This presentation assumes that no Collective Growth stockholders exercise redemption rights with respect to their Public Shares.

 

   

Assuming Maximum Redemptions: This presentation assumes that all Collective Growth stockholders holding approximately 14,019,139 shares of Class A Stock will exercise their redemption rights for the $140.2 million of funds in Collective Growth Corporation’s trust account. Innoviz’s obligations under the Business Combination Agreement are subject to having at least $200 million Aggregate Transaction Proceeds (as such term is defined in the Business Combination Agreement). Furthermore, Collective Growth Corporation will only proceed with the Business Combination if it will have net tangible assets of at least $5.0 million either immediately prior to or upon consummation of the Business Combination.

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

This information is only a summary and should be read together with the summary historical financial information included elsewhere in this proxy statement/prospectus, and the historical financial statements of Collective Growth Corporation and Innoviz Technologies and related notes that are included elsewhere in this proxy statement/prospectus. The unaudited pro forma combined per share information of Collective Growth Corporation and Innoviz Technologies is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement/consent solicitation statement/prospectus.

The unaudited pro forma combined earnings per share information below does not purport to represent the earnings 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 Collective Growth Corporation and Innoviz Technologies would have been had the companies been combined during the periods presented.

 

                 Combined Pro Forma and
Equivalent Pro Forma (5) (6)
 
     Collective
Growth
Corporation
    Innoviz
Technologies
    Assuming No
Redemptions
    Assuming
Maximum
Redemptions(4)
 

As of and For the Nine Months Ended September 30, 2020(2,3)

        

Book value per share(1)

   $ 1.14     $ (11.71   $ 3.14     $ 2.35  

Weighted average shares outstanding—basic and diluted

     4,398,294       16,420,146       129,755,843       113,653,204  

Net loss per share—basic and diluted

   $ (0.14   $ (3.77   $ (0.38   $ (0.44

As of and for the Year Ended December 31, 2019(2,3)

        

Book value per share(1)

   $ 0.01     $ (9.39     N/A (2     N/A (2

Weighted average shares outstanding—basic and diluted

     3,750,000       15,524,845       121,734,802       105,632,163  

Net loss per share—basic and diluted

   $ (0.00   $ (5.22   $ (0.55   $ (0.64


 

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(1)

Book value per share equals total equity excluding convertible preferred shares divided by total shares outstanding. The Collective Growth Corporation historical weighted average shares outstanding excludes 14,019,139 shares subject to redemption for Collective Growth Corporation at September 30, 2020.

(2)

Book value per share is not available on a pro forma combined basis as of December 31, 2019, as a pro forma combined balance sheet is not required to be prepared for that period.

(3)

No cash dividends were declared under the periods presented.

(4)

Assuming that no Antara Top-up Amount (as defined in the Business Combination Agreement) was subscribed for.

(5)

Equivalent pro forma per share amounts were calculated by multiplying the pro forma book value per share and pro forma loss per share by the Exchange Ratio, which is one Innoviz ordinary share for one share of common stock of Collective Growth.

(6)

Because the Exchange Ratio is 1:1, the pro forma book value per share and pro forma loss per share is equal to the Equivalent Pro Forma.



 

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RISK FACTORS

If the Business Combination is completed, the combined company will operate in a market environment that is difficult to predict and that involves significant risks, many of which will be beyond its control. You should carefully consider the risks described below before voting your shares. Additional risks and uncertainties not presently known to Innoviz and Collective Growth or that they do not currently believe are important to an investor, if they materialize, also may adversely affect the Business Combination. If any of the events, contingencies, circumstances or conditions described in the following risks actually occur, the combined company’s business, financial condition or results of operations could be seriously harmed. If that happens, the trading price of Innoviz ordinary shares or, if the Business Combination is not consummated, Collective Growth Common Stock could decline, and you may lose part or all of the value of any Innoviz ordinary shares or, if the Business Combination is not consummated, shares of Collective Growth Common Stock that you hold.

Risks Related to the Business Combination

Collective Growth may not have sufficient funds to consummate the Business Combination.

As of September 30, 2020, Collective Growth had approximately $390,234 available to it outside the trust account to fund its working capital requirements. On March 1, 2021, the Sponsor loaned Collective Growth an aggregate of $100,000 for working capital purposes, which loan was evidenced by a convertible promissory note. If Collective Growth is required to seek additional capital, it would need to borrow funds from the Sponsor, its management team or other third parties to operate or it may be forced to liquidate. None of such persons is under any obligation to advance funds to Collective Growth in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released to Collective Growth upon completion of the Business Combination. If Collective Growth is unable to consummate the Business Combination because it does not have sufficient funds available, Collective Growth will be forced to cease operations and liquidate the trust account. Consequently, Collective Growth’s public stockholders may receive less than $10 per share and their warrants will expire worthless.

If Collective Growth’s stockholders fail to properly demand conversion rights, they will not be entitled to convert their Collective Growth Common Stock into a pro rata portion of the trust account.

Collective Growth stockholders holding public shares may demand that Collective Growth convert their public shares into a pro rata portion of the trust account, calculated as of two (2) business days prior to the special meeting. To demand conversion rights, Collective Growth stockholders must deliver their shares (either physically or electronically) to Collective Growth’s transfer agent no later than two (2) business days prior to the special meeting. Any stockholder who fails to properly demand conversion rights by delivering his, her or its shares will not be entitled to convert his, her or its shares into a pro rata portion of the trust account. See the section of this proxy statement/prospectus titled “Special Meeting of Collective Growth Stockholders—Conversion Rights” for the procedures to be followed if you wish to convert your shares to cash.

The Business Combination remains subject to conditions that Collective Growth cannot control and if such conditions are not satisfied or waived, the Business Combination may not be consummated.

The Business Combination is subject to a number of conditions, including the condition that Collective Growth have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-5(g)(1) of the Exchange Act) either immediately prior to or upon consummation of the Business Combination, the condition that there is no legal prohibition against consummation of the business combination, that the Innoviz ordinary shares be approved for listing on Nasdaq subject only to official notice of issuance thereof and the requirement to have a sufficient number of round lot holders, receipt of securityholder approvals, continued effectiveness of the registration statement of which this proxy statement/prospectus is a part, the truth and accuracy of Collective Growth’s and Innoviz’s representations and warranties made in the Business Combination Agreement, the non-termination of the Business Combination Agreement and consummation of certain ancillary agreements. There are no assurances that all conditions to the business combination will be satisfied or that the conditions will be satisfied in the time frame expected.

 

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If the conditions to the Business Combination are not met (and are not waived, to the extent waivable), either Collective Growth or Innoviz may, subject to the terms and conditions of the Business Combination Agreement, terminate the Business Combination Agreement. See the section of this proxy statement/prospectus titled “The Business Combination Agreement—Termination.”

The exercise of Collective Growth’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 Collective Growth’s stockholders’ best interest.

In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Business Combination Agreement, would require Collective Growth to agree to amend the Business Combination Agreement, to consent to certain actions taken by Innoviz or to waive rights that Collective Growth is entitled to under the Business Combination Agreement. Waivers may arise because of changes in the course of Innoviz’s business, a request by Innoviz to undertake actions that would otherwise be prohibited by the terms of the Business Combination Agreement or the occurrence of other events that would have a material adverse effect on Innoviz’s business and would entitle Collective Growth to terminate the Business Combination Agreement. In any of such circumstances, it would be at Collective Growth’s discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of the financial and personal interests of the directors and officers described in the following risk factors may result in a conflict of interest on the part of one or more of the directors or officers between what he or they may believe is best for Collective Growth and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, Collective Growth does not believe there will be any changes or waivers that Collective Growth’s directors and officers would be likely to make after stockholder approval of the business combination proposal has been obtained. While certain changes could be made without further stockholder approval, Collective Growth will circulate a new or amended proxy statement/prospectus and resolicit Collective Growth’s stockholders if changes to the terms of the Business Combination that would have a material impact on its stockholders or represent a fundamental change in the proposals being voted upon.

Innoviz may issue additional Innoviz ordinary shares or other equity securities without seeking approval of the Innoviz shareholders, which would dilute your ownership interests and may depress the market price of the Innoviz ordinary shares.

Upon consummation of the Business Combination, Innoviz will have warrants outstanding to purchase up to an aggregate of 22,359,488 Innoviz ordinary shares. Assuming the earnout targets are satisfied, Innoviz will be required to issue an additional 4,271,154 Innoviz ordinary shares to the Company Management, Perception and Antara Capital Master. Further, Innoviz may choose to seek third party financing to provide additional working capital for the Innoviz business, in which event Innoviz may issue additional equity securities. Following the consummation of the Business Combination, Innoviz may also issue additional Innoviz ordinary shares or other equity securities of equal or senior rank in the future for any reason or in connection with, among other things, future acquisitions, the redemption of outstanding warrants or repayment of outstanding indebtedness, without shareholder approval, in a number of circumstances.

The issuance of additional Innoviz ordinary shares or other equity securities of equal or senior rank would have the following effects:

 

   

Innoviz’s existing shareholders’ proportionate ownership interest in Innoviz will decrease;

 

   

the amount of cash available per share, including for payment of dividends in the future, may decrease;

 

   

the relative voting strength of each previously outstanding Innoviz ordinary share may be diminished; and

 

   

the market price of the Innoviz ordinary shares may decline.

 

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Future resales of the Innoviz ordinary shares issued in connection with the Business Combination may cause the market price of the Innoviz to drop significantly, even if Innoviz’s business is doing well.

Certain equityholders of Innoviz, certain equityholders of Collective Growth, Perception and Antara Capital entered into the Confidentiality and Lockup Agreement with Innoviz. Pursuant to the Confidentiality and Lockup Agreement, such shareholders have agreed that they will not, during the period beginning at the Effective Time and continuing to and including the date that is one hundred eighty (180) days after the date of closing of the Business Combination, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares, or any options or warrants to purchase any shares, or any securities convertible into, exchangeable for or that represent the right to receive shares, or any interest in any of the foregoing, whether now owned or hereinafter acquired, owned directly by such shareholder (including holding as a custodian) or with respect to which such shareholder has beneficial ownership within the rules and regulations of the SEC (in each case, subject to certain exceptions set forth in the Confidentiality and Lockup Agreement). See the section of this proxy statement/prospectus titled “Agreements Entered into in connection with the Business Combination—Confidentiality and Lockup Agreement.”

Further, concurrently with the execution of the Business Combination Agreement, Innoviz, certain equityholders of Innoviz, certain equityholders of Collective Growth, Perception and Antara Capital entered into the Registration Rights Agreement, providing such stockholders with customary demand registration rights and piggy-back registration rights with respect to registration statements filed by Innoviz after the closing. See the section of this proxy statement/prospectus titled “Agreements Entered into in connection with the Business Combination—Registration Rights Agreement.”

Upon expiration of the applicable lock-up periods and upon the effectiveness of any registration statement Innoviz files pursuant to the above-referenced Registration Rights Agreement, in a registered offering of securities pursuant to the Securities Act or otherwise in accordance with Rule 144 under the Securities Act, the Innoviz shareholders may sell large amounts of Innoviz ordinary shares and warrants in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in the trading price of the Innoviz ordinary shares or the Innoviz warrants or putting significant downward pressure on the price of the Innoviz ordinary shares or warrants. Additionally, downward pressure on the market price of the Innoviz ordinary shares or Innoviz warrants likely will result from sales of Innoviz ordinary shares issued in connection with the exercise of warrants. Further, sales of Innoviz ordinary shares or warrants upon expiration of any applicable lockup periods could encourage short sales by market participants. Generally, short selling means selling a security, contract or commodity not owned by the seller. The seller is committed to eventually purchase the financial instrument previously sold. Short sales are used to capitalize on an expected decline in the security’s price. Short sales of Innoviz ordinary shares or warrants could have a tendency to depress the price of the Innoviz ordinary shares or the Innoviz warrants, respectively, which could increase the potential for short sales.

Additionally, through the Subscription Agreements Innoviz has agreed with the PIPE Investors to register the PIPE shares on a resale registration statement following the closing of the Transactions. These shares will be freely tradable without restriction or further registration under the Securities Act, unless the shares are held by any of our “affiliates” as such term is defined in Rule 144 under the Securities Act. This additional liquidity in the market for Innoviz ordinary shares may lead to downward pressure on the market price of the Innoviz ordinary shares.

We cannot predict the size of future issuances of Innoviz ordinary shares or warrants or the effect, if any, that future issuances and sales of shares of Innoviz ordinary shares or warrants will have on the market price of the Innoviz ordinary shares or warrants. Sales of substantial amounts of Innoviz ordinary shares (including those shares issued in connection with the Business Combination), or the perception that such sales could occur, may adversely affect prevailing market prices of Innoviz ordinary shares or warrants.

 

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The Collective Growth board of directors did not obtain a third-party fairness opinion in determining whether or not to proceed with the Business Combination.

Collective Growth’s board of directors did not obtain a third-party fairness opinion in connection with their determination to approve the Business Combination. In analyzing the Business Combination, Collective Growth’s board of directors and management conducted due diligence on Innoviz and researched the industry in which Innoviz operates and concluded that the business combination was fair to and in the best interest of Collective Growth and its stockholders. Accordingly, investors will be relying solely on the judgment of Collective Growth’s board of directors and management in valuing Innoviz’s business, and the board of directors and management may not have properly valued such business. The lack of a third-party fairness opinion may lead an increased number of stockholders to vote against the proposed Business Combination or demand redemption of their shares for cash, which could potentially impact Collective Growth’s ability to consummate the Business Combination or adversely affect Innoviz’s liquidity following the consummation of the Business Combination.

Collective Growth and Innoviz will incur significant transaction and transition costs in connection with the Business Combination.

Collective Growth and Innoviz have both incurred and expect to incur significant, non-recurring costs in connection with consummating the Transactions and operating as a public company following the consummation of the Transactions. Innoviz may also incur additional costs to retain key employees. All expenses incurred in connection with the Business Combination, including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring such fees, expenses and costs or paid by Innoviz following the closing of the Transactions.

Subsequent to the completion of the Business Combination, the combined company may be required to 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 the combined company’s ordinary share price, which could cause you to lose some or all of your investment.

Although Collective Growth has conducted extensive due diligence on Innoviz, Collective Growth cannot assure you that this diligence will surface all material issues that may be present in Innoviz’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Innoviz’s business and outside of its control will not later arise. As a result of these factors, the combined company may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in its reporting losses. Even if Collective Growth’s due diligence successfully identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with Collective Growth’s preliminary risk analysis. Even though these charges may be non-cash items and would not have an immediate impact on the combined company’s liquidity, the fact that the combined company reports charges of this nature could contribute to negative market perceptions of the combined company or its securities. In addition, charges of this nature may cause the combined company to violate net worth or other covenants to which the combined company may be subject as a result of assuming pre-existing debt held by Innoviz’s business or by virtue of the combined company obtaining post-combination debt financing. Accordingly, any stockholders who choose to remain shareholders following the Business Combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value.

The Innoviz securities to be received by Collective Growth’s securityholders as a result of the Business Combination will have different rights from Collective Growth securities.

Following completion of the Business Combination, Collective Growth’s securityholders will no longer be securityholders of Collective Growth but will instead be securityholders of Innoviz. There will be important differences between your current rights as a Collective Growth securityholder and your rights as an Innoviz securityholder. See “Description of Share CapitalComparison of Shareholder Rights” for a discussion of the different rights associated with the Innoviz securities.

 

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Collective Growth’s stockholders will have a reduced ownership and voting interest after consummation of the Business Combination and will exercise less influence over management.

After the completion of the Business Combination, Collective Growth’s stockholders will own a smaller percentage of the combined company than they currently own of Collective Growth. At the closing of the Transactions, existing Innoviz shareholders would hold approximately 97,500,000 of the issued and outstanding Innoviz ordinary shares (including Innoviz ordinary shares acquired pursuant to certain earnout conditions under the Business Combination Agreement) and current stockholders of Collective Growth would hold approximately 15,262,500 of the issued and outstanding Innoviz ordinary shares (assuming no holder of Collective Growth Common Stock exercises redemption rights as described in this proxy statement/prospectus, and based on current estimates of transaction expenses). Consequently, Collective Growth’s stockholders, as a group, will have reduced ownership and voting power in the combined company compared to their ownership and voting power in Collective Growth.

Even if we consummate the Business Combination, there is no guarantee that the Innoviz warrants will ever be in the money, and they may expire worthless and the terms of our warrants may be amended.

The exercise price for the Innoviz warrants will be $11.50 per ordinary share. Upon consummation of the Business Combination, the Collective Growth warrants will become Innoviz warrants, and the exercise price and number of shares issuable upon exercise of such warrants will change in accordance with the Exchange Ratio. There is no guarantee that the Innoviz warrants, following the Business Combination, will ever be in the money prior to their expiration, and as such, the warrants may expire worthless.

Collective Growth’s current directors and executive officers and their affiliates own shares of Collective Growth Common Stock, and private placement units, and private placement warrants that will be worthless if the Business Combination is not approved. Such interests may have influenced their decision to approve the Business Combination.

If the Business Combination or another business combination is not consummated by November 5, 2021 (or such later date as may be approved by Collective Growth’s stockholders), Collective Growth will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, the 3,750,000 shares of Class B Stock held by the Sponsor and Collective Growth’s directors and officers, which were acquired for an aggregate purchase price of $25,000 prior to the Collective Growth IPO, would be worthless because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Further, the Sponsor, which is affiliated with certain of Collective Growth’s directors and officers, other certain officers, and Cantor Fitzgerald & Co., purchased an aggregate of 262,500 private placement units at a price of $10.00 per unit and an aggregate of 1,875,000 private placement warrants at a price of $1.00 per warrant, concurrently with the Collective Growth IPO, for an aggregate purchase price of $4,500,000. The Class B Stock, Class A Stock, warrants underlying the private units, and the private warrants will become worthless if Collective Growth does not consummate a business combination by November 5, 2021 (or such later date as may be approved by Collective Growth stockholders in an amendment to the SPAC Charter). On the other hand, if the Business Combination is consummated, each outstanding share of Class B Stock (other than the shares forfeited pursuant to the Forfeiture Agreement) and each outstanding share of Class A Stock underlying the private units will convert into Innoviz ordinary shares in accordance with the Exchange Ratio at the closing and each outstanding Collective Growth warrant (including the Collective Growth warrants underlying the private units) will become an Innoviz warrant. The 3,750,000 sponsor shares had an aggregate market value of approximately $42.0 million, based upon the closing price per share of Class A Stock of $11.20 on Nasdaq on March 4, 2021. The private warrants (including the warrants included in the private units) had an aggregate market value of approximately $5.7 million based upon the closing price of $2.66 per warrant on Nasdaq on March 4, 2021. The Class A Stock underlying the private units had an aggregate market value of approximately $2.9 million based upon the closing price of $11.20 per share of Class A Stock on Nasdaq on March 4, 2021.

 

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These financial interests may have influenced the decision of Collective Growth’s directors and officers to approve the Business Combination and to continue to pursue the Business Combination. In considering the recommendations of Collective Growth’s board of directors to vote for the business combination proposals and other proposals, its stockholders should consider these interests. See the section of this proxy statement/prospectus titled “The Business Combination Proposals—Interests of Certain Persons in the Transactions.”

The Sponsor, an affiliate of a director of Collective Growth, is liable to ensure that proceeds of the trust account are not reduced by vendor claims in the event the Business Combination is not consummated. Such liability may have influenced the board’s decision to pursue the Business Combination and the board’s decision to approve it.

If the Business Combination or another business combination is not consummated by Collective Growth on or before November 5, 2021, the Sponsor, an affiliate of a director of Collective Growth, will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Collective Growth for services rendered or contracted for or for products sold to Collective Growth, but only if such a vendor or target business has not executed a waiver agreement. If Collective Growth consummates a business combination, on the other hand, Collective Growth will be liable for all such claims. Collective Growth has no reason to believe that the Sponsor will not be able to fulfill its indemnity obligations to Collective Growth.

These obligations of the Sponsor may have influenced the board’s decision to pursue the business combination with Innoviz or the board of director’s decision to approve the Business Combination. In considering the recommendations of Collective Growth’s board of directors to vote for the business combination proposals and other proposals, stockholders should consider these interests. See the section of this proxy statement/prospectus titled “Proposal One—The Business Combination Proposals—Interests of Certain Persons in the Transactions.”

Collective Growth’s directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to Collective Growth’s public stockholders in the event a business combination is not consummated.

If proceeds in the trust account are reduced below $10.00 per public share and the Sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, Collective Growth’s independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations. While Collective Growth currently expects that its independent directors would take legal action on Collective Growth’s behalf against the Sponsor to enforce the Sponsor’s indemnification obligations, it is possible that Collective Growth’s independent directors in exercising their business judgment may choose not to do so in any particular instance. If Collective Growth’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to Collective Growth’s public stockholders may be reduced below $10.00 per share.

Activities taken by existing Collective Growth stockholders to increase the likelihood of approval of the business combination proposal and other proposals could have a depressive effect on the Collective Growth Common Stock.

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding Collective Growth or its securities, Collective Growth, the Sponsor, Collective Growth’s officers and directors, Innoviz, the Innoviz officers and directors and/or their respective affiliates may purchase Collective Growth Common Stock from institutional and other investors who vote, or indicate an intention to vote, against the business combination proposal, 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 shares of Collective Growth Common Stock or vote their shares of Collective Growth Common Stock in favor of the business combination proposal. The purpose of such purchases and other transactions would be to increase the likelihood of approval of the business combination proposals by the holders of a majority of the outstanding shares of Collective Growth Common Stock and ensure that Collective Growth has in excess of $5,000,001 of net assets to consummate the Business Combination where it appears that such

 

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requirement would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares owned by the Sponsor for nominal value. Entering into any such arrangements may have a depressive effect on the Collective Growth Common Stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares of Collective Growth Common Stock at a price lower than market and may therefore be more likely to sell the Collective Growth Common Stock he owns, either prior to or immediately after the special meeting.

In addition, if such purchases are made, the public “float” of the Innoviz ordinary shares following the Business Combination and the number of beneficial holders of Innoviz securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of Innoviz securities on Nasdaq or another national securities exchange or reducing the liquidity of the trading market for the Innoviz ordinary shares.

The Business Combination may be completed even though material adverse effects may result from the announcement of the Business Combination, industry-wide changes and other causes.

In general, either Collective Growth or Innoviz may refuse to complete the Business Combination if there is a material adverse effect affecting the other party between the signing date of the Business Combination Agreement and the planned closing. However, certain types of changes do not permit either party to refuse to consummate the Business Combination, even if such change could be said to have a material adverse effect on Innoviz or Collective Growth, including the following events (except, in certain cases where the change has a disproportionate effect on a party):

 

   

changes generally affecting the economy and the financial or securities markets, including the COVID-19 pandemic;

 

   

the outbreak or escalation of war or any act of terrorism, civil unrest or natural disasters;

 

   

changes (including changes in law) or general conditions in the industry in which the party operates;

 

   

changes in GAAP, or the authoritative interpretation of GAAP; or

 

   

changes attributable to the public announcement or pendency of the Transactions or the execution or performance of the Business Combination Agreement.

Furthermore, Collective Growth or Innoviz may waive the occurrence of a material adverse effect affecting the other party. If a material adverse effect occurs and the parties still consummate the Business Combination, the market trading price of Innoviz’s ordinary shares and Innoviz warrants may suffer.

Delays in completing the Business Combination may substantially reduce the expected benefits of the Business Combination.

Satisfying the conditions to, and completion of, the Business Combination may take longer than, and could cost more than, Collective Growth expects. Any delay in completing or any additional conditions imposed in order to complete the Business Combination may materially adversely affect the benefits that Collective Growth expects to achieve from the Business Combination.

Collective Growth and Innoviz have no history operating as a combined company. The unaudited pro forma condensed combined financial information may not be an indication of Innoviz’s financial condition or results of operations following the business combination, and accordingly, you have limited financial information on which to evaluate Innoviz and your investment decision.

Innoviz has a limited operating history and Innoviz and Collective Growth have no prior history as a combined entity and their operations have not been previously managed on a combined basis. The unaudited pro forma condensed combined financial information contained in this proxy statement/prospectus has been prepared

 

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using the consolidated historical financial statements of Collective Growth and Innoviz, and is presented for illustrative purposes only and should not be considered to be an indication of the results of operations including, without limitation, future revenue, or financial condition of Collective Growth following the Business Combination. Certain adjustments and assumptions have been made regarding Collective Growth after giving effect to the Business Combination. Innoviz and Collective Growth believe these assumptions are reasonable, however, the information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments are difficult to make with accuracy. These assumptions may not prove to be accurate, and other factors may affect Collective Growth’s results of operations or financial condition following the consummation of the Business Combination. For these and other reasons, the historical and pro forma condensed combined financial information included in this proxy statement/prospectus does not necessarily reflect Innoviz’s results of operations and financial condition and the actual financial condition and results of operations of Innoviz following the Business Combination may not be consistent with, or evident from, this pro forma financial information.

The projections and forecasts presented in this proxy statement/prospectus may not be an indication of the actual results of the transaction or Innoviz’s future results.

This proxy statement/prospectus contains projections and forecasts prepared by Innoviz. None of the projections and forecasts included in this proxy statement/prospectus have been prepared with a view toward public disclosure other than to certain parties involved in the Business Combination or toward complying with SEC guidelines or GAAP. The projections and forecasts were prepared based on numerous variables and assumptions which are inherently uncertain and may be beyond the control of Innoviz and Collective Growth and exclude, among other things, transaction-related expenses. Important factors that may affect actual results and results of Innoviz’s operations following the Business Combination, or could lead to such projections and forecasts not being achieved include, but are not limited to: client demand for Innoviz’s products, an evolving competitive landscape, rapid technological change, margin shifts in the industry, regulation changes in a highly regulated environment, successful management and retention of key personnel, unexpected expenses and general economic conditions. As such, these projections and forecasts may be inaccurate and should not be relied upon as an indicator of actual past or future results.

If Collective Growth is unable to complete the Business Combination or another business combination by November 5, 2021 (or such other date as approved by Collective Growth stockholders through approval of an amendment to the SPAC Charter), Collective Growth will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, Collective Growth public stockholders may only receive $10 per share (or less than such amount in certain circumstances) and Collective Growth warrants will expire worthless.

If Collective Growth is unable to complete the Business Combination or another business combination within the required time period, Collective Growth 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 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest released to Collective Growth to pay Collective Growth’s income taxes and dissolution expenses, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of its remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case, Collective Growth public stockholders may only receive $10 per share, and Collective Growth warrants will expire worthless. In certain circumstances, Collective Growth public stockholders may receive less than $10 per share on the redemption of their shares.

 

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In the event of liquidation by Collective Growth, third parties may bring claims against Collective Growth and, as a result, the proceeds held in the trust account could be reduced and the per-share liquidation price received by stockholders could be less than $10 per share.

Under the terms of the SPAC Charter, Collective Growth must complete the Business Combination or another business combination by November 5, 2021 (unless such date is extended by Collective Growth’s stockholders) or Collective Growth must cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against Collective Growth. Although Collective Growth has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses it has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the trust account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the trust account could be subject to claims which could take priority over those of Collective Growth’s public stockholders. If Collective Growth is unable to complete a business combination within the required time period, the Sponsor has agreed that it will be liable to Collective Growth if and to the extent any claims by a vendor for services rendered or products sold to it, or a prospective target business with which it has discussed entering into a transaction agreement, reduces the amount of funds in the trust account to below $10.00 per public share, 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 Collective Growth’s indemnity of the underwriters of the 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 responsible to the extent of any liability for such third party claims. Furthermore, the Sponsor will not be liable to public stockholders and instead will only have liability to Collective Growth. Collective Growth has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and, therefore, the Sponsor may not be able to satisfy those obligations. Collective Growth has not asked the Sponsor to reserve for such eventuality. Therefore, the per-share distribution from the trust account in such a situation may be less than the approximately $10.01 estimated to be in the trust account as of two business days prior to the special meeting date, due to such claims.

Additionally, if Collective Growth is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, or if Collective Growth otherwise enters compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law and may be included in its bankruptcy

Collective Growth’s stockholders may be held liable for claims by third parties against Collective Growth to the extent of distributions received by them.

If Collective Growth is unable to complete the Business Combination or another business combination within the required time period, Collective Growth 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 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest released to Collective Growth to pay Collective Growth’s income taxes and dissolution expenses, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of its remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Collective Growth cannot assure you that it will properly assess all claims that may be potentially brought against Collective Growth. As such, Collective Growth’s stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its stockholders may extend well beyond the third anniversary of the date of

 

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distribution. Accordingly, Collective Growth cannot assure you that third parties will not seek to recover from its stockholders amounts owed to them by Collective Growth.

Additionally, if Collective Growth is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Collective Growth’s stockholders. Because Collective Growth intends to distribute the proceeds held in the trust account to its public stockholders promptly after the expiration of the time period to complete a business combination, this may be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to access to or distributions from its assets. Furthermore, Collective Growth’s board may be viewed as having breached their fiduciary duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and Collective Growth to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. Collective Growth cannot assure you that claims will not be brought against it for these reasons.

Collective Growth may be a target of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the Business Combination from being completed.

Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into business combination agreements or similar agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Collective Growth’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting consummation of the Transactions, then that injunction may delay or prevent the Transactions from being completed. Currently, Collective Growth is not aware of any securities class action lawsuits or derivative lawsuits being filed in connection with the Transactions.

The Sponsor and Collective Growth’s officers and directors have agreed to vote in favor of the Business Combination, regardless of how Collective Growth’s public stockholders vote.

The Sponsor, as well as Collective Growth’s officers and directors, beneficially own and are entitled to vote an aggregate of approximately 21.1% of the outstanding Collective Growth Common Stock. These holders have agreed to vote their shares in favor of the business combination proposal. These holders have also indicated that they intend to vote their shares in favor of all other proposals being presented at the meeting. Accordingly, it is more likely that the necessary stockholder approval for the business combination proposal and the other proposals will be received than would be the case if these holders agreed to vote their founder shares in accordance with the majority of the votes cast by Collective Growth’s public stockholders.

The ongoing COVID-19 pandemic may adversely affect Collective Growth’s and Innoviz’s ability to consummate the Transactions.

The COVID-19 pandemic has resulted in governmental authorities worldwide implementing numerous measures to contain the virus, including travel restrictions, quarantines, shelter-in-place orders and business limitations and shutdowns. More generally, the pandemic raises the possibility of an extended global economic downturn and has caused volatility in financial markets. The pandemic may also amplify many of the other risks described in this proxy statement/prospectus.

Collective Growth and Innoviz may be unable to complete the Transactions if continued concerns relating to COVID-19 restrict travel and limit the ability to have meetings with potential investors or the Innoviz personnel. The extent to which COVID-19 impacts Collective Growth’s and Innoviz’s ability to consummate the Transactions will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue

 

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for an extended period of time, Collective Growth’s and Innoviz’s ability to consummate the Transactions may be materially adversely affected.

If the Business Combination does not qualify as a reorganization under Section 368(a) of the Code, is taxable under Section 367(a) of the Code, or is otherwise taxable to U.S. Holders of Collective Growth common stock and/or Collective Growth warrants, then the Business Combination would be taxable with respect to such U.S. Holders.

The Business Combination (i) is intended to qualify as a reorganization within the meaning of Section 368(a) of the Code (a “reorganization”), and (ii) is not expected to result in gain being recognized by U.S. Holders (as defined in “Material U.S. Federal Income Tax Considerations”) of Collective Growth common stock and Collective Growth warrants immediately prior to the Effective Time under Section 367(a) of the Code (other than with respect to any such holder that would own, actually or constructively, 5% or more (by vote or value) of the outstanding shares of Innoviz stock immediately after the Business Combination) (together, the “Intended Tax Treatment”). The parties intend to report the Business Combination in a manner consistent with the Intended Tax Treatment. However, there are significant factual and legal uncertainties as to whether the Business Combination will qualify for the Intended Tax Treatment. For example, under Section 368(a) of the Code, the acquiring corporation (or, in the case of certain reorganizations structured similarly to the Business Combination, its corporate parent) must continue, either directly or indirectly through certain controlled corporations, either a significant line of the acquired corporation’s historic business or use a significant portion of the acquired corporation’s historic business assets in a business. However, there is an absence of guidance directly on point as to how the provisions of Section 368(a) of the Code apply in the case of an acquisition of a corporation with no active business and only investment-type assets, such as Collective Growth. Moreover, Section 367(a) of the Code and the applicable Treasury regulations promulgated thereunder provide that where a U.S. shareholder exchanges stock in a U.S. corporation for stock in a non-U.S. corporation in a transaction that would otherwise qualify as a reorganization within the meaning of Section 368(a) of the Code, the U.S. shareholder is required to recognize gain, but not loss, realized on such exchange unless certain requirements are met. There are significant factual and legal uncertainties concerning the determination of certain of these requirements. Moreover, the closing of the Business Combination is not conditioned upon the receipt of an opinion of counsel that the Business Combination will qualify for the Intended Tax Treatment, and neither Collective Growth nor Innoviz intends to request a ruling from the IRS regarding the U.S. federal income tax treatment of the Business Combination. Accordingly, no assurance can be given that the IRS will not challenge the Intended Tax Treatment or that a court will not sustain a challenge by the IRS.

If, at the Effective Time, any requirement for Section 368(a) of the Code is not met, then a U.S. Holder of Collective Growth common stock and/or Collective Growth warrants would recognize gain or loss in an amount equal to the difference, if any, between the fair market value (as of the closing date of the Business Combination) of Innoviz ordinary shares and/or Innoviz warrants received in the Business Combination, over such holder’s aggregate tax basis in the corresponding Collective Growth common stock and/or Collective Growth warrants surrendered by such holder in the Business Combination.

If, at the Effective Time, any requirement for Section 367(a) of the Code is not satisfied, then a U.S. Holder of Collective Growth common stock would recognize gain (but not loss) in an amount equal to the excess, if any, of the fair market value as of the closing date of the Business Combination of Innoviz ordinary shares received in the Business Combination, over such holder’s aggregate tax basis in the Collective Growth common stock surrendered by such holder in the Business Combination.

The IRS may not agree that Innoviz should be treated as a non-U.S. corporation for U.S. federal income tax purposes.

Although Innoviz is incorporated and tax resident in Israel, the IRS may assert that it should be treated as a U.S. corporation (and therefore a U.S. tax resident) for U.S. federal income tax purposes pursuant to Section 7874 of the Code. For U.S. federal income tax purposes, a corporation is generally considered a U.S.

 

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“domestic” corporation (or U.S. tax resident) if it is organized in the United States, and a corporation is generally considered a “foreign” corporation (or non-U.S. tax resident) if it is not a U.S. corporation. Because Innoviz is an entity incorporated and tax resident in Israel, it would generally be classified as a foreign corporation (or non-U.S. tax resident) under these rules. Section 7874 of the Code provides an exception under which a foreign incorporated and foreign tax resident entity may, in certain circumstances, be treated as a U.S. corporation for U.S. federal income tax purposes.

As more fully described in the section titled “Material U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Treatment of Innoviz—Tax Residence of Innoviz for U.S. Federal Income Tax Purposes,” based on the terms of the Business Combination and certain factual assumptions, Innoviz is not currently expected to be treated as a U.S. corporation for U.S. federal income tax purposes under Code Section 7874 after the Business Combination. However, the application of Section 7874 of the Code is complex and is subject to detailed regulations (the application of which is uncertain in various respects and would be impacted by changes in such U.S. Treasury regulations with possible retroactive effect) and is subject to certain factual uncertainties. Accordingly, there can be no assurance that the IRS will not challenge the status of Innoviz as a foreign corporation under Code Section 7874 or that such challenge would not be sustained by a court.

If the IRS were to successfully challenge under Code Section 7874 Innoviz’s status as a foreign corporation for U.S. federal income tax purposes, Innoviz and certain Innoviz shareholders would be subject to significant adverse tax consequences, including a higher effective corporate income tax rate on Innoviz and future withholding taxes on certain Innoviz shareholders, depending on the application of any income tax treaty that might apply to reduce such withholding taxes.

See “Material U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Treatment of Innoviz—Tax Residence of Innoviz for U.S. Federal Income Tax Purposes” for a more detailed discussion of the application of Code Section 7874 to the Business Combination. Investors in Innoviz should consult their own advisors regarding the application of Code Section 7874 to the Business Combination.

Code Section 7874 may limit the ability of Collective Growth to use certain tax attributes following the Business Combination, increase Innoviz’s U.S. affiliates’ U.S. taxable income or have other adverse consequences to Innoviz and Innoviz’s shareholders.

Following the acquisition of a U.S. corporation by a foreign corporation, Code Section 7874 can limit the ability of the acquired U.S. corporation and its U.S. affiliates to use U.S. tax attributes (including net operating losses and certain tax credits) to offset U.S. taxable income resulting from certain transactions, as well as result in certain other adverse tax consequences, even if the acquiring foreign corporation is respected as a foreign corporation for purposes of Code Section 7874. In general, if a foreign corporation acquires, directly or indirectly, substantially all of the properties held directly or indirectly by a U.S. corporation and after the acquisition, the former shareholders of the acquired U.S. corporation hold at least 60% (by either vote or value) but less than 80% (by vote and value) of the shares of the foreign acquiring corporation by reason of holding shares in the acquired U.S. corporation, subject to other requirements, certain adverse tax consequences under Section 7874 of the Code may apply.

If these rules apply to the Business Combination, Innoviz and certain of Innoviz’s shareholders may be subject to adverse tax consequences including, but not limited to, restrictions on the use of tax attributes with respect to “inversion gain” recognized over a 10-year period following the transaction, disqualification of dividends paid from preferential “qualified dividend income” rates and the requirement that any U.S. corporation owned by Innoviz include as “base erosion payments” that may be subject to a minimum U.S. federal income tax any amounts treated as reductions in gross income paid to certain related foreign persons. Furthermore, certain “disqualified individuals” (including officers and directors of a U.S. corporation) may be subject to an excise tax on certain stock-based compensation held thereby at a rate of 20%.

As more fully described in the section titled “Material U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Treatment of Innoviz—Utilization of Collective Growth’s Tax Attributes and Certain

 

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Other Adverse Tax Consequences to Innoviz and Innoviz’s Shareholders,” based on the terms of the Business Combination and certain factual assumptions, Innoviz is not currently expected to be subject to these rules under Code Section 7874 after the Business Combination.

However, even if Innoviz is not subject to the above adverse consequences under Section 7874, Innoviz may be limited in using its equity to engage in future acquisitions of U.S. corporations over a 36-month period following the Business Combination. If Innoviz were to be treated as acquiring substantially all of the assets of a U.S. corporation within a 36-month period after the Business Combination, the Section 7874 Regulations would exclude certain shares of Innoviz attributable to the Business Combination for purposes of determining the Section 7874 Percentage of that subsequent acquisition, making it more likely that Code Section 7874 will apply to such subsequent acquisition.

See “Material U.S. Federal Income Tax Considerations—U.S. Federal Income Tax Treatment of Innoviz—Utilization of Collective Growth’s Tax Attributes and Certain Other Adverse Tax Consequences to Innoviz and Innoviz’s Shareholders” for a more detailed discussion of the application of Code Section 7874 to the Business Combination. Investors in Innoviz should consult their own advisors regarding the application of Code Section 7874 to the Business Combination.

Risks Related to the Adjournment Proposal

If the adjournment proposal is not approved, Collective Growth’s board of directors will not have the ability to adjourn the special meeting to a later date.

If, at the special meeting, the chairman presiding over the special meeting determines that it would be in the best interests of Collective Growth to adjourn the special meeting to give Collective Growth more time to consummate the Business Combination for whatever reason (such as if the Business Combination Proposal is not approved, or if Collective Growth would have net tangible assets of less than $5,000,001 either immediately prior to or upon the consummation of the Transactions, or if additional time is needed to fulfil other closing conditions), the chairman presiding over the special meeting will seek approval to adjourn the special meeting to a later date or dates. If the adjournment proposal is not approved, the chairman will not have the ability to adjourn the special meeting to a later date in order to solicit further votes. In such event, the Business Combination would not be completed.

Risks Related to the Combined Company Following the Business Combination

Any of the following risk factors could cause the combined company’s actual results to differ materially from anticipated results. These risks and uncertainties are not the only ones that the combined company faces.

Risks Related to Innoviz’s Business and Industry

Innoviz is an early stage company with a history of losses, and expects to incur significant expenses and continuing losses for the foreseeable future.

Innoviz has incurred net losses on an annual basis since its inception. Innoviz incurred a net loss of approximately $49.3 million for the nine months ended September 30, 2020 and net losses of approximately $67.7 million and $56.4 million for the years ended December 31, 2019 and 2018, respectively. Innoviz believes that it will continue to incur operating and net losses each quarter until at least the time it begins commercial deliveries of its LiDAR-based products. Even if Innoviz is able to successfully develop and sell its LiDAR solutions, there can be no assurance that they will be commercially successful.

Innoviz expects the rate at which it will incur losses to be significantly higher in future periods as Innoviz:

 

   

expands its production capabilities to produce its LiDAR solutions, including costs associated with outsourcing the production of its LiDAR solutions;

 

   

expands its design, development, installation and servicing capabilities;

 

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increases its investment in research and development;

 

   

produces an inventory of its LiDAR solutions;

 

   

supports additional design wins of serial production of OEM consumer vehicle programs; and

 

   

increases its sales and marketing activities and develops its distribution infrastructure.

Innoviz will incur the costs and expenses from these efforts before it receives incremental revenues with respect thereto, and therefore Innoviz’s losses in future periods may be significant. In addition, Innoviz may find that these efforts are more expensive than it currently anticipates or that these efforts may not result in revenues, which would further increase Innoviz’s losses.

Innoviz’s limited operating history and evolving business model makes evaluating its business and future prospects difficult and may increase the risk of your investment.

Innoviz has been focused on developing LiDAR products for autonomous driving systems since its inception in 2016. This relatively limited operating history makes it difficult to evaluate Innoviz’s future prospects and the risks and challenges it may encounter. Further, because Innoviz has limited historical financial data and operates in a rapidly evolving market, any predictions about its future revenue and expenses may not be as accurate as they would be if it had a longer operating history or operated in a more predictable market.

In addition, Innoviz’s business model may undergo changes or differ with respect to certain Tier-1 partners such that instead of manufacturing and selling a full-blown LiDAR solution, it may sell a chip-set containing certain components to the Tier-1 partner(s), which will then assemble the LiDAR solution in accordance with Innoviz’s design and sell the solution to the OEMs. To the extent that its business model does change, this will also render its historical operating history and financial data less useful in assessing its future prospects.

If Innoviz fails to address the risks and difficulties that it faces, including those described elsewhere in this “Risk Factors” section, its business, financial condition and results of operations could be adversely affected. Innoviz has encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories in rapidly changing industries. If Innoviz’s assumptions regarding these risks and uncertainties, which it uses to plan and operate its business, are incorrect or change, or if it does not address these risks successfully, its results of operations could differ materially from its expectations and its business, financial condition and results of operations could be adversely affected.

Innoviz is creating innovative technology by designing and developing unique components. The high price of or low yield in these components may affect Innoviz’s ability to sell at competitive prices, or may lead to losses.

Part of Innoviz’s technological approach to providing cost-efficient LiDAR-based autonomous driving solutions featuring superior performance involves using a multi-disciplinary approach to design some of its components. Many of these components are complex and contain multiple sophisticated elements. Volume production of these elements may require extreme precision and present challenges to their manufacturers. This can lead to increased costs of production of the components which the manufacturers may pass on to Innoviz or a production run may yield fewer usable components than what was desired or anticipated. Any such increased components cost or suboptimal yield in production of Innoviz’s components may significantly increase Innoviz’s production costs and thereby decrease its margins and potentially increase or cause losses for Innoviz.

Innoviz expects to invest substantially in research and development for the purpose of developing and commercializing new products, and these investments could significantly reduce its profitability or increase its losses and may not generate revenue for Innoviz.

Innoviz’s future growth depends on maintaining its technological leadership in order to introduce new products that achieve market acceptance and penetrate new markets. Therefore Innoviz plans to incur substantial research and development costs as part of its efforts to design, develop, manufacture and commercialize new products and enhance existing products. Innoviz’s research and development expenses were approximately

 

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$42.1 million during the nine months ended September 30, 2020, and approximately $59.3 million and $58.3 million during the years ended December 31, 2019 and 2018, respectively and are likely to grow in the future. Future research and development expenses will adversely affect Innoviz’s future results of operations. In addition, Innoviz’s research and development program may not produce successful results, and even if it does successfully produce new products, those products may not achieve market acceptance, create additional revenue or become profitable.

Innoviz may experience significant delays in the design, production and launch of its LiDAR products for autonomous driving systems, which could harm its business, prospects, financial condition and operating results.

Innoviz’s recently announced product, InnovizTwo, which is still in the development and testing phase. Any delay in the financing, design, production and launch of InnovizTwo or of any other future products, could materially damage Innoviz’s brand, business, prospects, financial condition and operating results. There are often delays in the design, production and commercial release of new products, and Innoviz has limited experience in managing the process of introducing a new product and managing its launch. To the extent Innoviz delays the launch of InnovizTwo or any future product, its growth prospects could be adversely affected as it may fail to grow its market share.

Innoviz is substantially dependent on its design win with BMW and its relationship with Magna, and its business could be materially and adversely affected if the BMW L3 Program was terminated.

Innoviz’s business is substantially dependent on its design win with BMW. Innoviz is the supplier of LiDAR to the BMW Level 3 program (“BMW L3 Program”), through its Tier-1 partner, Magna. For the nine months ended September 30, 2020, sales to Magna accounted for approximately $2.3 million and for the years ended December 31, 2019 and December 31, 2018, sales to Magna accounted for approximately $1.0 million, and $0.5 million, respectively, representing 50% or more of total revenues during each respective period. There can be no assurance that Innoviz will be able to maintain its relationship with BMW or Magna and secure orders from Magna for BMW’s program. If BMW terminates or significantly alters or delays its L3 Program and/or alters its relationship with Innoviz in a manner that is adverse to Innoviz, Innoviz’s business would be materially adversely affected. Similarly, if Innoviz is unable to maintain its relationship with Magna, or if its arrangement with Magna is modified so that the economic terms become less favorable to Innoviz, then Innoviz’s business would be materially adversely affected.

The period of time from a design win to implementation is long and Innoviz is subject to the risks of not achieving design wins, cancellation or postponement of contracts or unsuccessful implementation.

Prospective customers, including those in the automotive industry, generally must make significant commitments of resources to test and validate Innoviz’s products and confirm that they can integrate with other technologies before including them in any particular system, product or model. The development cycles of Innoviz’s products with new customers varies widely depending on the application, market, customer and the complexity of the product. In the automotive market, for example, this development cycle can be five to seven years. As a result of these lengthy development cycles, Innoviz spends significant time and resources to have its products selected by automotive OEMs and their suppliers for use in a particular vehicle model, which is known as a design win. If Innoviz does not achieve a design win with respect to a particular vehicle model, it may not have an opportunity to supply its products to the automotive OEM for that vehicle model for a period of many years. If Innoviz’s products are not selected by an automotive OEM or its suppliers for one vehicle model or if Innoviz’s products are not successful in that vehicle model, it is unlikely that its product will be deployed in other vehicle models of that OEM. Further, Innoviz is subject to the risk that customers cancel or postpone implementation of its technology, as well as that it will not be able to integrate its technology successfully into a larger system with other sensing modalities. If Innoviz fails to win a significant number of vehicle models from one or more of automotive OEMs or their suppliers, or its customers cancel or postpone implementation, its business, results of operations and financial condition will be materially and adversely affected.

 

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Innoviz may need to raise additional funds in the future in order to execute its business plan and these funds may not be available to Innoviz when it needs them. If Innoviz cannot raise additional funds when it needs them, its business, prospects, financial condition and operating results could be negatively affected.

Innoviz may require additional capital in the future in order to fund its growth strategy or to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances. It may also determine to raise equity or debt financing for other reasons. For example, in order to further enhance business relationships with current or potential customers or partners, Innoviz may issue equity or equity-linked securities to such current or potential customers or partners.

Innoviz may not be able to timely secure additional debt or equity financing on favorable terms, or at all. If Innoviz raises additional funds through the issuance of equity or convertible debt or other equity-linked securities, its existing shareholders could experience significant dilution. In addition, any debt financing obtained by Innoviz in the future, whether in the form of a credit facility or otherwise, could involve restrictive covenants relating to its capital raising activities and other financial and operational matters, which may make it more difficult for Innoviz to obtain additional capital and to pursue business opportunities, including potential acquisitions. If Innoviz is unable to obtain adequate financing or financing on terms satisfactory to Innoviz when Innoviz requires it, Innoviz’s ability to continue to grow or support its business and to respond to business challenges could be significantly limited. In addition, because Innoviz’s decision to issue debt or equity in the future will depend on market conditions and other factors beyond its control, it cannot predict or estimate the amount, timing, nature or success of its future capital raising efforts.

If market adoption of LiDAR for autonomous vehicles does not continue to develop, or develops more slowly than Innoviz expects, its business will be adversely affected.

While Innoviz’s LiDAR-based solutions can be applied to different use cases across end markets, Innoviz has been and expects to continue to be significantly focused on automotive applications. Despite the fact that the automotive industry has engaged in considerable effort to research and test LiDAR products for advanced driver-assistance systems (“ADAS”) and autonomous driving applications, there is no guaranty that the automotive industry will introduce LiDAR products in commercially available vehicles. LiDAR products are still relatively new in the market and it is possible that other sensor technologies and devices, based on new or existing technology or a combination of technologies, will achieve acceptance or leadership in the ADAS and autonomous driving industries. Even if LiDAR products are used in initial generations of autonomous driving technology and certain ADAS products, Innoviz cannot guarantee that LiDAR products will be designed into or included in subsequent generations of such commercialized technology. In addition, Innoviz expects that initial generations of autonomous vehicles will be focused on limited applications, such as robo-taxis, and that mass market adoption of autonomous technology may lag behind these initial applications significantly. The speed of market growth for ADAS or autonomous vehicles is difficult if not impossible to predict, and it is more difficult to predict this market’s future growth in light of the economic consequences of the COVID-19 pandemic. In addition, to the extent that the market for autonomous vehicle develops successfully, Innoviz expects that there will be increasing competition from providers of sensing technology based on LiDAR and other modalities. If commercialization of LiDAR products is not successful, or not as successful as Innoviz or the market expects, or if other sensing modalities gain acceptance by developers of autonomous driving systems or ADAS, automotive OEMs, regulators and safety organizations or other market participants by the time autonomous vehicle technology achieves mass market adoption, Innoviz’s business, results of operations and financial condition will be materially and adversely affected.

Innoviz targets many customers that are large companies with substantial negotiating power, exacting product standards and potentially competitive internal solutions. If Innoviz is unable to sell its products to these customers, its prospects and results of operations will be adversely affected.

Many of Innoviz’s customers and potential customers are large, multinational companies with substantial negotiating power relative to Innoviz and, in some instances, may have internal solutions that are competitive to

 

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Innoviz’s products. These large, multinational companies also have significant resources, which may allow them to acquire or develop competitive technologies either independently or in partnership with others. Accordingly, even after investing significant resources to develop a product, Innoviz may not secure a design win or may not be able to commercialize a product on profitable terms. If Innoviz’s products are not selected by these large companies or if these companies develop or acquire competitive technology or negotiate terms that are disadvantageous to Innoviz, it will have an adverse effect on Innoviz’s business.

Innoviz continues to implement strategic initiatives designed to grow its business. These initiatives may prove more costly than it currently anticipates, and Innoviz may not succeed in increasing its revenue in an amount sufficient to offset the costs of these initiatives and to achieve and maintain profitability.

Innoviz continues to make investments and implement initiatives designed to grow its business, including:

 

   

investing in research and development;

 

   

expanding its sales and marketing efforts to attract new customers across industries;

 

   

investing in new applications and markets for its products;

 

   

further enhancing its manufacturing processes and partnerships; and

 

   

investing in legal, accounting, and other administrative functions necessary to support its operations as a public company.

These initiatives may prove more expensive than it currently anticipates, and Innoviz may not succeed in increasing its revenue, if at all, in an amount sufficient to offset these higher expenses and to achieve and maintain profitability. The market opportunities Innoviz is pursuing are at an early stage of development, and it may be many years before the end markets Innoviz expects to serve generate significant demand for its products at scale, if at all.

In addition, Innoviz’s revenue may be adversely affected for a number of reasons, including the development and/or market acceptance of new technology that competes with its LiDAR products, changes by OEMs or other market participants to their autonomous vehicle technology, failure of Innoviz’s customers to commercialize autonomous systems that include Innoviz’s LiDAR solutions, Innoviz’s inability to effectively manage its inventory or manufacture products at scale, Innoviz’s failure to enter new markets or to attract new customers or expand orders from existing customers or due to increasing competition. Furthermore, it is difficult to predict the size and growth rate of Innoviz’s target markets, customer demand for its products, commercialization timelines, developments in autonomous sensing and related technology, the entry of competitive products, or the success of existing competitive products and services. Accordingly, Innoviz does not expect to achieve profitability over the near term. If Innoviz’s revenue does not grow over the long term, its ability to achieve and maintain profitability may be adversely affected, and the value of its business may significantly decrease.

The markets in which Innoviz competes are characterized by rapid technological change, which requires Innoviz to continue to develop new products and product innovations, and could adversely affect market adoption of its products.

While Innoviz intends to invest substantial amounts on research and development, continuing technological changes in sensing technology, as well as changes in the ADAS and autonomous driving industries, could adversely affect adoption of LiDAR and/or Innoviz’s products. Innoviz’s future success will depend upon its ability to develop and introduce a variety of new capabilities and innovations to its existing product offerings, as well as to introduce a variety of new product offerings to address the changing needs of the markets in which Innoviz offers its products. For example, Innoviz is currently working on its InnovizTwo product, as well as several other new LiDAR products. Innoviz cannot guarantee that its new products will be released in a timely manner, or at all, or achieve market acceptance. Delays in delivering new products that meet customer requirements could damage Innoviz’s relationships with customers and lead them to seek alternative sources of supply.

 

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If Innoviz is unable to devote adequate resources to develop products or cannot otherwise successfully develop products or system configurations that meet customer requirements, including pricing, on a timely basis or that remain competitive with other technological alternatives, its products could lose market share, its revenue will decline, it may experience operating losses and its business and prospects will be adversely affected.

Certain of Innoviz’s strategic, development and supply arrangements could be terminated or may not materialize into long-term contract partnership arrangements.

Innoviz has arrangements with strategic, development and supply partners and collaborators. Some of these arrangements are evidenced by memorandums of understandings, early stage agreements that are used for design and development purposes but that will require renegotiation at later stages of development or replacement by production or master agreements that have yet to be implemented under separately negotiated statements of work, each of which could be terminated or may not materialize into next-stage contracts or long-term contract partnership arrangements. If these arrangements are terminated or if Innoviz is unable to enter into next-stage contracts or long-term operational contracts, its business, prospects, financial condition and operating results may be materially adversely affected.

Innoviz may experience difficulties in managing its growth and expanding its operations.

Innoviz expects to experience significant growth in the scope and nature of its operations. Innoviz’s ability to manage its operations and future growth will require Innoviz to continue to improve its operational, financial and management controls, compliance programs and reporting systems. Innoviz is currently in the process of strengthening its compliance programs, including its compliance programs related to export controls, privacy and cybersecurity and anti-corruption. Innoviz 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 its business, reputation and financial results.

Continued pricing pressures, automotive OEM cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle or technology programs may result in lower than anticipated margins or losses, which may adversely affect Innoviz’s business.

Cost-cutting initiatives adopted by Innoviz’s customers often result in increased downward pressure on pricing. Innoviz expects that its agreements with automotive OEMs may require step-downs in pricing over the term of the agreements or, if commercialized, over the periods of production. In addition, Innoviz’s automotive OEM customers often reserve the right to terminate their supply contracts for convenience, which enhances their ability to obtain price reductions. Automotive OEMs also possess significant leverage over their suppliers, including Innoviz, because the automotive component supply industry is highly competitive, serves a limited number of customers and has a high fixed cost base. Accordingly, Innoviz expects to be subject to substantial continuing pressure from automotive OEMs and Tier-1 suppliers to reduce the price of its products. It is possible that pricing pressures beyond Innoviz’s expectations could intensify as automotive OEMs pursue restructuring, consolidation and cost-cutting initiatives. If Innoviz is unable to generate sufficient production cost savings in the future to offset price reductions, its gross margin and profitability would be adversely affected.

Adverse conditions in the automotive industry or the global economy more generally could have adverse effects on Innoviz’s results of operations.

Innoviz’s business is directly affected by and significantly dependent on business cycles and other factors affecting the global automobile industry and global economy generally. Automotive production and sales 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, fuel costs, fuel availability, environmental impact, governmental incentives and regulatory requirements and political volatility, especially in energy-producing countries and growth markets. In addition, automotive production and sales can be affected by Innoviz’s automotive OEM customers’ ability to continue operating in response to challenging economic conditions and in response to regulatory requirements and other factors. The volume of automotive production in

 

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North America, Europe and the rest of the world has fluctuated, sometimes significantly, from year to year, and Innoviz expects any such fluctuations to give rise to fluctuations in the demand for its products. Any significant adverse change in any of these factors may result in a reduction in automotive sales and production by Innoviz’s automotive OEM customers and could have a material adverse effect on its business, results of operations and financial condition.

Adoption of LiDAR for other emerging markets may not occur or may occur much more slowly than Innoviz anticipates, which would adversely affect Innoviz’s business and prospects.

Innoviz is investing in and pursuing market opportunities outside of the automotive markets, including in industrial, delivery, surveillance and security robots, mapping applications for topography and smart city initiatives. Innoviz believes that its future revenue growth, if any, will depend in part on its ability to expand within new markets such as these and to enter new markets as they emerge. Each of these markets presents distinct risks and, in many cases, requires Innoviz to address the particular requirements of that market.

Addressing these requirements can be time-consuming and costly. The market for LiDAR technology outside of automotive applications is relatively new, rapidly developing and unproven in many markets or industries. Many of the participants in the markets for LiDAR technology outside of the automotive industry are still in testing and developing their technologies and products and may not succeed to commercialize products or systems with LiDAR products or at all. Innoviz cannot be certain that LiDAR will be sold into these markets, or any market outside of automotive market, at scale. Adoption of LiDAR products, including Innoviz’s products, outside of the automotive industry 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 such as Innoviz can keep pace with rapid technological change in certain developing markets and the global response to the COVID-19 pandemic and the length of any associated work stoppages. If LiDAR technology does not achieve commercial success outside of the automotive industry, or if the market develops at a pace slower than Innoviz expects, Innoviz’s business, results of operation and financial condition may be materially and adversely affected.

As part of growing its business, Innoviz may make acquisitions. If Innoviz fails to successfully select, execute or integrate its acquisitions, then its business, results of operations and financial condition could be materially adversely affected and the stock price of the combined company could decline.

From time to time, Innoviz may undertake acquisitions to add new products and technologies, acquire talent, gain new sales channels or enter into new markets or sales territories. Acquisitions involve numerous risks and challenges, including relating to the successful integration of the acquired business and its key personnel, entering into new territories or markets with which Innoviz has limited or no prior experience, establishing or maintaining business relationships with new customers, channel partners, vendors and suppliers, unexpected liabilities and potential post-closing disputes.

To date, Innoviz has no experience with acquisitions and the integration of acquired technology and personnel. Further, the ability to successfully identify an acquisition candidate, negotiate and close an acquisition and then integrate the acquired company may be made more difficult by travel limitations and difficulties resulting from the COVID-19 pandemic. Failure to successfully identify, complete, manage and integrate acquisitions could materially and adversely affect its business, financial condition and results of operations and could cause the combined company’s share price to decline.

 

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

Innoviz’s products are technologically complex and require high standards to manufacture. Innoviz has experienced in the past and will likely also experience in the future defects, errors or bugs at various stages of development and manufacturing. Innoviz may be unable to timely release new products, manufacture existing products, correct problems that have arisen or correct such problems to its customers’ satisfaction. Additionally, undetected errors, defects, especially as new products are introduced or as new versions are released, could result in serious injury, including fatalities, to the end users of technology incorporating Innoviz’s products, or those in the surrounding area, its customers never being able to commercialize technology incorporating our products, litigation against Innoviz, negative publicity and other consequences. These risks are particularly prevalent in the highly competitive autonomous driving and ADAS markets. Some errors or defects in Innoviz’s products may only be discovered after they have been tested, commercialized and deployed by customers. In accordance with customary practice in the automotive industry, Innoviz provides its customer with a time-limited warranty to its products. If such errors or defects occur within the respective warranty period, Innoviz may incur significant additional development costs and product recall, repair or replacement costs. These problems may also result in claims against Innoviz by its customers or by third parties. Innoviz’s reputation or brand may be damaged as a result of these problems and customers may be reluctant to buy its products, which could adversely affect its ability to retain existing customers and attract new customers, and could adversely affect its financial results.

In addition, Innoviz could face material legal claims for breach of contract, product liability, 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 Innoviz and its products. In addition, Innoviz’s 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 Innoviz and its business could be adversely affected.

Moreover, legislation and regulations may be adopted or changed over time to increase Innoviz’s liability associated with the use of its products, which may make Innoviz’s liability insurance coverage inadequate to fully mitigate such risks or rather make it significantly more costly, which could adversely affect its operating results and financial condition.

Innoviz operates in a highly competitive market against a large number of both established competitors and new market entrants, and some market participants have substantially greater resources than Innoviz.

The markets for sensing technology applicable to autonomous solutions across numerous industries are highly competitive. Innoviz’s future success will depend on its ability to maintain its lead by continuing to develop and protect from infringement advanced LiDAR technology in a timely manner and to stay ahead of existing and new competitors. Innoviz’s competitors are numerous and they compete with it directly by offering LiDAR products and indirectly by attempting to solve some of the same challenges with different technology. Innoviz faces competition from camera and radar companies, other developers of LiDAR products, Tier-1 suppliers and other technology and automotive supply companies, some of which have significantly greater resources than it does. Some examples of Innoviz’s competitors include Hesai, Ibeo Automotive Systems, LeddarTech, Velodyne, Luminar, Valeo SA, Bosch and Continental. In the automotive market, Innoviz’s competitors have commercialized non-LiDAR-based ADAS technology which has achieved market adoption, strong brand recognition and may continue to improve. Other competitors are working towards commercializing autonomous driving technology and either by themselves, or with a publicly announced partner, have substantial financial, marketing, research and development and other resources. Some of Innoviz’s customers in the autonomous vehicle and ADAS markets have announced development efforts or made acquisitions directed at creating their own LiDAR-based or other sensing technologies, which would compete with Innoviz’s solutions. Innoviz does not know how close these competitors are to commercializing autonomous driving systems or novel

 

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ADAS applications. In markets outside of the automotive industry, its competitors, like Velodyne, seek to develop new sensing applications across industries. Even in these emerging markets, Innoviz faces substantial competition from numerous competitors seeking to prove the value of their technology. Additionally, increased competition may result in pricing pressure and reduced margins and may impede Innoviz’s ability to increase the sales of its products or cause it to lose market share, any of which will adversely affect its business, results of operations and financial condition.

Innoviz expects its results of operations to fluctuate on a quarterly and annual basis, which could cause the share price of the combined company to fluctuate or decline.

Innoviz’s quarterly results of operations have fluctuated in the past and may vary significantly in the future. For example, its revenues for the nine months ended September 20, 2020 and the years ended December 31, 2019 and 2018, respectively, were approximately $3,680,000, $1,575,000 and $62,000. As such, historical comparisons of its operating results may not be meaningful. In particular, because Innoviz’s sales to date have primarily been to customers making purchases for research and development projects, sales in any given quarter can fluctuate based on the timing and success of its customers’ development projects. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance. Innoviz’s quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of its control and may not fully reflect the underlying performance of Innoviz’s business. These fluctuations could adversely affect Innoviz’s ability to meet its expectations or those of securities analysts or investors. If Innoviz does not meet these expectations for any period, the value of its business and its securities, or those of the combined company, could decline significantly. Factors that may cause these quarterly fluctuations include, without limitation, those listed below:

 

   

The timing and magnitude of orders and shipments of Innoviz’s products in any quarter;

 

   

Pricing changes Innoviz may adopt to drive market adoption or in response to competitive pressure;

 

   

Innoviz’s ability to retain its existing customers and attract new customers;

 

   

Innoviz’s ability to develop, introduce, manufacture and ship in a timely manner products that meet customer requirements;

 

   

Disruptions in Innoviz’s sales channels or termination of its relationship with important channel partners;

 

   

Delays in customers’ purchasing cycles or deferments of customers’ purchases in anticipation of new products or updates from Innoviz or its competitors;

 

   

Fluctuations in demand pressures for Innoviz’s products;

 

   

The mix of products sold in any quarter;

 

   

The duration of the global COVID-19 pandemic and the time it takes for economic recovery;

 

   

The timing and rate of broader market adoption of autonomous systems utilizing Innoviz’s smart vision solutions across the automotive and other market sectors;

 

   

Market acceptance of LiDAR and further technological advancements by Innoviz’s competitors and other market participants;

 

   

The ability of Innoviz’s customers to commercialize systems that incorporate its products;

 

   

Any change in the competitive dynamics of Innoviz’s markets, including consolidation of competitors, regulatory developments and new market entrants;

 

   

Innoviz’s ability to effectively manage its inventory;

 

   

Changes in the source, cost, availability of and regulations pertaining to materials Innoviz uses;

 

   

Adverse litigation, judgments, settlements or other litigation-related costs, or claims that may give rise to such costs; and

 

   

General economic, industry and market conditions, including trade disputes.

 

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Changes in tax laws or exposure to additional income tax liabilities could affect Innoviz’s future profitability.

Factors that could materially affect Innoviz’s future effective tax rates include but are not limited to:

 

   

Changes in tax laws or the regulatory environment;

 

   

Changes in accounting and tax standards or practices;

 

   

Changes in the composition of operating income by tax jurisdiction; and

 

   

Innoviz’s operating results before taxes.

Because Innoviz does not have a long history of operating at its present scale and it has significant expansion plans, Innoviz’s effective tax rate may fluctuate in the future. Future effective tax rates could be affected by operating losses in jurisdictions where no tax benefit can be recorded under U.S. GAAP, changes in the composition of earnings in countries with differing tax rates, changes in deferred tax assets and liabilities, or changes in tax laws.

Changes in Innoviz’s product mix may impact its financial performance.

Innoviz’s financial performance can be affected by the mix of products it sells during a given period. If Innoviz’s sales include more of the lower gross margin products than higher gross margin products, its results of operations and financial condition may be adversely affected. There can be no guarantees that Innoviz will be able to successfully alter its product mix so that it is selling more of its high gross margin products. In addition, Innoviz’s earnings forecasts and guidance after the Business Combination are expected to include assumptions about product sales mixes. If actual results vary from this projected product mix of sales, Innoviz’s results of operations and financial condition could be adversely affected.

Innoviz is highly dependent on the services of its co-founders, Omer Keilaf, Oren Rosenzweig and Oren Buskila.

Innoviz is highly dependent on its co-founders, Omer Keilaf, Oren Rosenzweig and Oren Buskila. Messrs. Keilaf, Rosenzweig and Buskila have acted as Innoviz’s Chief Executive Officer, Chief Business Officer and Chief R&D Officer, respectively, since its inception, and as such, are deeply involved in all aspects of Innoviz’s business, including product development. The loss of any of them would adversely affect Innoviz’s business because this could make it more difficult to, among other things, compete with other market participants, manage Innoviz’s R&D activities and retain existing customers or cultivate new ones. Negative public perception of, or negative news related to, any of Messrs. Keilaf, Rosenzweig or Buskila may adversely affect Innoviz’s brand, relationship with customers or standing in the industry.

Innoviz’s management team has limited experience managing a public company.

Innoviz’s management team has limited experience managing a publicly-traded company, interacting with public company investors and complying with the increasingly-complex laws pertaining to public companies. Innoviz’s management team may not successfully or efficiently manage their new roles and responsibilities, Innoviz’s transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from Innoviz’s senior management and could divert their attention away from the day-to-day management of Innoviz’s business, which could adversely affect Innoviz’s business, financial condition and operating results.

Innoviz’s business depends on its ability to attract and retain highly skilled personnel and senior management. Failure to effectively retain, attract and motivate key employees could diminish the anticipated benefits of the Business Combination.

Competition for highly-skilled personnel is often intense, especially in Israel, where Innoviz’s principal office is located, and it may incur significant costs to attract them. Innoviz may face challenges in attracting or

 

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retaining qualified personnel to fulfill its current or future needs. Innoviz has, from time to time, experienced, and it expects to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. In addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment. If the perceived value of Innoviz’s equity or equity awards declines, including after Closing, it may adversely affect Innoviz’s ability to retain highly skilled employees. The success of the Business Combination will depend in part on the attraction, retention and motivation of executive personnel critical to the business and operations of Innoviz. If Innoviz fails to attract new personnel or fails to retain and motivate its current personnel, Innoviz could face disruptions in its operations, strategic relationships, key information, expertise or know-how and unanticipated recruitment and onboarding costs, and its business and future growth prospects could be adversely affected.

Innoviz relies on third-party suppliers and, because some of the key components in its products come from limited or sole sources of supply, Innoviz is susceptible to supply shortages, long lead times for components and supply changes, any of which could disrupt its supply chain and could delay deliveries of its products to customers.

Some of the components that go into the manufacture of Innoviz’s solutions are sourced from third-party suppliers. Some of the key components used to manufacture Innoviz’s products come from limited or single source suppliers. Innoviz is therefore subject to the risk of shortages and long lead times in the supply of these components and the risk that its suppliers discontinue or modify components used in its products. This risk may be amplified by the effects of the COVID-19 pandemic and other health epidemics and outbreaks due to, among other things, work stoppages or interruptions. For example, Innoviz’s products depend on external semi-conductor foundries. Any disruptions to those foundries could materially and adversely affect Innoviz’s ability to manufacture its solutions. In addition, the lead times associated with certain components are lengthy and preclude rapid changes in quantities and delivery schedules. Innoviz has in the past experienced and 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. In the event of a component shortage, supply interruption or material pricing change from suppliers of these components, Innoviz may not be able to develop alternate sources in a timely manner or at all in the case of sole or limited sources. 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, could adversely affect Innoviz’s relationships with its customers and could cause delays in shipment of its products and adversely affect its operating results. In addition, increased component costs could result in lower gross margins. Even where Innoviz is able to pass increased component costs along to its customers, there may be a lapse of time before it is able to do so such that Innoviz must absorb the increased cost. If Innoviz is unable to buy these components in quantities sufficient to meet its requirements on a timely basis, it will not be able to deliver products to its customers, which may result in such customers using competitive products instead of Innoviz’s products.

Innoviz’s sales and operations in international markets expose it to operational, financial and regulatory risks.

International sales comprise a significant amount of Innoviz’s overall revenue. Sales to international customers accounted for 100%, 82% and 93% of Innoviz’s revenue in 2018 and 2019 and the nine months ended September 30, 2020, respectively. Innoviz is committed to growing its international sales, and while it has committed resources to expanding its international operations and sales channels, these efforts may not be successful. International operations are subject to a number of other risks, including:

 

   

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;

 

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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;

 

   

Delayed revenue recognition;

 

   

Less effective protection of intellectual property;

 

   

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

 

   

Import and export laws and the impact of tariffs; and

 

   

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

The occurrence of any of these risks could negatively affect Innoviz’s international business and consequently its business, operating results and financial condition.

Unforeseen eye safety issues could result in injuries to people which could result in adverse effects on Innoviz’s business and reputation.

Innoviz’s LiDAR utilizes lasers for performing 3D sensing. While Innoviz has developed system components designed to prevent its LiDAR lasers from harming human eyes, in the event that an unforeseen issue arises that results in serious injury, Innoviz’s reputation or brand may be damaged and Innoviz could face material legal claims for breach of contract, product liability, 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 Innoviz and its products. In addition, Innoviz’s business liability insurance coverage could prove inadequate with respect to a claim and future coverage may be unavailable on acceptable terms or at all.

Innoviz’s business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, global pandemics, and interruptions by man-made problems, such as network security breaches, computer viruses or terrorism. Material disruptions of Innoviz’s business or information systems resulting from these events could adversely affect its operating results.

A significant natural disaster, such as an earthquake, fire, flood or significant power outage or other similar events, such as infectious disease outbreaks or pandemic events, including the COVID-19 pandemic, could have an adverse effect on Innoviz’s business and operating results. The COVID-19 pandemic has produced meaningful operational challenges and Innoviz expects to continue to experience disruptions in its business during 2021. COVID-19 has heightened many of the other risks described herein, such as the demand for Innoviz’s products, its ability to achieve or maintain profitability and its ability to raise additional capital in the future. Despite the implementation of network security measures, Innoviz’s networks and LiDAR products also may be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with its solutions. In addition, natural disasters, acts of terrorism or war could cause disruptions in Innoviz’s remaining manufacturing operations, Innoviz’s or its customers’ or channel partners’ businesses, Innoviz’s suppliers’ or the economy as a whole. Innoviz also relies on information technology systems to communicate among its workforce

 

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and with third parties. Any disruption to Innoviz’s communications, whether caused by a natural disaster or by manmade problems, such as power disruptions, could adversely affect its business. Innoviz does not have a formal disaster recovery plan or policy in place and does not currently require that its suppliers’ partners have such plans or policies in place. To the extent that any such disruptions result in delays or cancellations of orders or impede its suppliers’ ability to timely deliver product components, or the deployment of its products, Innoviz’s business, operating results and financial condition would be adversely affected.

Innoviz has been, and may in the future be, adversely affected by the global COVID-19 pandemic, the duration and economic, governmental and social impact of which is difficult to predict, which may significantly harm Innoviz’s business, prospects, financial condition and operating results.

The ongoing COVID-19 pandemic as well as other possible health epidemics and outbreaks could result in a material adverse impact on Innoviz’s or its customers’ business operations including reduction or suspension of operations in the U.S. or certain parts of the world. Innoviz’s engineering and manufacturing operations, among others, cannot all be conducted in a remote working structure and often require on-site access to materials and equipment. Innoviz has customers with international operations in varying industries. It also depends on suppliers and manufacturers worldwide. Depending upon the duration of the ongoing COVID-19 pandemic and the associated business interruptions, its customers, suppliers, manufacturers and partners may suspend or delay their engagement with Innoviz, which could result in a material adverse effect on its financial condition. Innoviz’s response to the ongoing COVID-19 pandemic may prove to be inadequate and it may be unable to continue its operations in the manner it had prior to the outbreak, and may endure interruptions, reputational harm, delays in its product development and shipments, all of which could have an adverse effect on its business, operating results, and financial condition. In addition, when the pandemic subsides, Innoviz cannot assure you as to the timing of any economic recovery, which could continue to have a material adverse effect on its target markets and its business.

Risks Related to Innoviz’s Intellectual Property

Innoviz may not be able to adequately protect or enforce its intellectual property rights or prevent unauthorized parties from copying or reverse engineering its solutions. Innoviz’s efforts to protect and enforce its intellectual property rights and prevent third parties from violating its rights may be costly.

The success of Innoviz’s products and its business depends in part on Innoviz’s ability to obtain patents and other intellectual property rights and maintain adequate legal protection for its products in the United States and other international jurisdictions. Innoviz relies on a combination of patent, copyright, service mark, trademark and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect its proprietary rights, all of which provide only limited protection. Innoviz cannot assure you that any patents will be issued with respect to its currently pending patent applications or that any trademarks will be registered with respect to its currently pending applications in a manner that gives Innoviz adequate defensive protection or competitive advantages, if at all, or that any patents issued to Innoviz or any trademarks registered by it will not be challenged, invalidated or circumvented. Innoviz has filed for patents and trademarks in the United States and in certain international jurisdictions, but such protections may not be available in all countries in which it operates or in which Innoviz seeks to enforce its intellectual property rights, or may be difficult to enforce in practice. Innoviz’s currently issued patents and trademarks and any patents and trademarks that may be issued or registered, as applicable, in the future with respect to pending or future applications may not provide sufficiently broad protection or may not prove to be enforceable in actions against alleged infringers. Innoviz cannot be certain that the steps it has taken will prevent unauthorized use of its technology or the reverse engineering of its technology. Moreover, others may independently develop technologies that are competitive to Innoviz or infringe Innoviz’s intellectual property.

Protecting against the unauthorized use of Innoviz’s intellectual property, products and other proprietary rights is expensive and difficult, particularly internationally. Innoviz believes that its patents relating to the use of 905nm lasers in LiDAR products for the autonomous vehicle market are foundational and it intends to enforce the intellectual property portfolio it has built. Unauthorized parties may attempt to copy or reverse engineer

 

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Innoviz’s solutions or certain aspects of Innoviz’s solutions that it considers proprietary. Litigation may be necessary in the future to enforce or defend Innoviz’s intellectual property rights, to prevent unauthorized parties from copying or reverse engineering its solutions, to determine the validity and scope of the proprietary rights of others or to block the importation of infringing products into the U.S.

Effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which Innoviz’s products are available and competitors based in other countries may sell infringing products in one or more markets. An inability to adequately protect and enforce Innoviz’s intellectual property and other proprietary rights or an inability to prevent authorized parties from copying or reverse engineering its smart vision solutions or certain aspects of its solutions that Innoviz considers proprietary could seriously adversely affect its business, operating results, financial condition and prospects.

In addition to patented technology, Innoviz relies on its unpatented proprietary technology, trade secrets, processes and know-how.

Innoviz relies on proprietary information (such as 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 Innoviz believes is best protected by means that do not require public disclosure.

Innoviz generally seeks 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 its employees, consultants, contractors and third parties. However, Innoviz may fail to enter into the necessary agreements, and even if entered into, these agreements may be breached or may otherwise fail to prevent disclosure, third-party infringement or misappropriation of its 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. Innoviz has limited control over the protection of trade secrets used by its current or future manufacturing partners and suppliers and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, Innoviz’s proprietary information may otherwise become known or be independently developed by its competitors or other third parties. To the extent that its employees, consultants, contractors, advisors and other third parties use intellectual property owned by others in their work for Innoviz, 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 Innoviz’s proprietary rights, and failure to obtain or maintain protection for its proprietary information could adversely affect its competitive business position. Furthermore, laws regarding trade secret rights in certain markets where Innoviz operates may afford little or no protection to its trade secrets.

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

Third-party claims that Innoviz is infringing intellectual property, whether successful or not, could subject it too costly and time-consuming litigation or expensive licenses, and its business could be adversely affected.

Although Innoviz holds patents related to its products, a number of companies, both within and outside of the LiDAR industry, hold other patents covering aspects of LiDAR products. In addition to these patents, participants in this industry typically also protect their technology, especially embedded software, through copyrights and trade secrets. As a result, there is frequent litigation based on allegations of infringement, misappropriation or other violations of intellectual property rights. Innoviz may receive in the future inquiries from other intellectual property holders and may become subject to claims that it infringes their intellectual property rights, particularly as Innoviz expands its presence in the market. In addition, parties may claim that the names and branding of Innoviz’s products infringe their trademark rights in certain countries or territories. If

 

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such a claim were to prevail, Innoviz may have to change the names and branding of its products in the affected territories and it could incur other costs.

Innoviz currently has a number of agreements in effect pursuant to which it has agreed to defend, indemnify and hold harmless its customers, suppliers, and partners from damages and costs which may arise from the infringement by Innoviz’s products of third-party patents or other intellectual property rights. The scope of these indemnity obligations varies, but may, in some instances, include indemnification for damages and expenses, including attorneys’ fees. Innoviz’s insurance may not cover all intellectual property infringement claims. A claim that its products infringe a third party’s intellectual property rights, even if untrue, could adversely affect Innoviz’s relationships with its customers, may deter future customers from purchasing its products and could expose Innoviz to costly litigation and settlement expenses. Even if Innoviz is not a party to any litigation between a customer and a third party relating to infringement by its products, an adverse outcome in any such litigation could make it more difficult for Innoviz to defend its products against intellectual property infringement claims in any subsequent litigation in which it is a named party. Any of these results could adversely affect Innoviz’s brand and operating results.

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

Legal and Regulatory Risks Related to Innoviz’s Business

Innoviz is subject to, and must remain in compliance with, numerous laws and governmental regulations concerning the manufacturing, use, distribution and sale of its products. Some of Innoviz’s customers also require that it comply with their own unique requirements relating to these matters.

Innoviz manufactures and sells products that contain electronic components, and such components may contain materials that are subject to government regulation in both the locations where Innoviz manufactures and assembles its products, as well as the locations where Innoviz sells its products. For example, in the United States, laser-emitting products, including Innoviz’s LiDAR systems, are subject to regulation by the U.S. Food and Drug Administration, or FDA, under the Electronic Product Radiation Control Provisions of the Federal Food, Drug, and Cosmetic Act and its implementing regulations. Among other things, these laws and regulations require the submission of annual reports to the FDA certifying that such products comply with applicable performance standards, the maintenance of manufacturing, testing, and distribution records, and the reporting of certain product defects to the FDA and/or consumers. If Innoviz’s products fail to comply with applicable FDA regulations, Innoviz and/or its products could be subjected to a variety of enforcement actions or sanctions, such as product recalls, repairs or replacements, warning letters, untitled letters, safety alerts, injunctions, import alerts, administrative product detentions or seizures, or civil penalties. The occurrence of any of the foregoing could harm Innoviz’s business, results of operations, and financial condition.

Since Innoviz operates on a global basis, it must continually monitor applicable laws and regulations, and engage in an ongoing compliance process to ensure that Innoviz and its suppliers are in compliance with all existing laws and regulations. If there is an unanticipated or onerous new legislation or regulation that significantly impacts Innoviz’s use of various components or requires more expensive components, such legislation or regulation could materially adversely affect its business, results of operations and financial condition.

Innoviz’s products are also used for autonomous driving and ADAS applications, which are subject to complicated and rapidly evolving laws and regulatory schemes that vary from jurisdiction to jurisdiction at the

 

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state, federal and international levels, including requirements related to safety, data privacy and security, and product liability, among other areas. These are rapidly evolving areas in which new or changed requirements could impose limitations on the use of LiDAR generally or Innoviz’s products specifically. If Innoviz fails to adhere to these new laws and regulations or fails to continually monitor emerging developments, it may be subject to litigation, loss of customers or negative publicity and its business, results of operations and financial condition will be adversely affected.

Concerns over environmental pollution and climate change have produced significant legislative and regulatory efforts on a global basis, and Innoviz believes this will continue both in scope and in the number of countries participating. These changes could directly increase the cost of energy, which may have an effect on the way Innoviz manufactures products or utilizes energy to produce its products. In addition, any new regulations or laws in the environmental area might increase the cost of raw materials or key components Innoviz uses in its products. Environmental regulations require Innoviz to reduce product energy usage, monitor and exclude an expanding list of restricted substances and to participate in required recovery and recycling of its products. Innoviz is unable to predict how any future changes will impact it and if such impacts will be material to its business.

Innoviz’s business may be adversely affected by changes in automotive safety regulations or concerns that drive further regulation of the automobile safety market.

Government vehicle safety regulations are an important factor for Innoviz’s business. Historically, these regulations have imposed ever-more stringent safety regulations for vehicles. These safety regulations often require, or customers demand that, vehicles have more safety features per vehicle and more advanced safety products.

While Innoviz believes increasing automotive safety standards will present a market opportunity for its products, government safety regulations are subject to change based on a number of factors that are not within Innoviz’s control, including new scientific or technological data, adverse publicity regarding industry recalls and safety risks of autonomous driving and ADAS, accidents involving its products, domestic and foreign political developments or considerations, and litigation relating to its products and its competitors’ products. Changes in government regulations, as well as changes or evolution in court doctrines in interpreting those regulations, especially in the autonomous driving and ADAS industries could adversely affect Innoviz’s business. If government priorities shift and Innoviz is unable to adapt to changing regulations or to court interpretations of those regulations, its business may be materially and adversely affected.

Federal and local regulators impose more stringent compliance and reporting requirements in response to product recalls and safety issues in the automotive industry. As the cars that carry Innoviz’s sensors go into production, it is subject to existing stringent requirements under the National Traffic and Motor Vehicle Safety Act of 1966, or the Vehicle Safety Act, including a duty to report, subject to strict timing requirements, safety defects with its products. The Vehicle Safety Act imposes potentially significant civil penalties for violations including the failure to comply with such reporting actions. Innoviz is also subject to the existing U.S. Transportation Recall Enhancement, Accountability and Documentation Act, or TREAD, which requires equipment manufacturers, such as Innoviz, to comply with “Early Warning” requirements by reporting certain information to the NHTSA, such as information related to defects or reports of injury related to its products. TREAD imposes criminal liability for violating such requirements if a defect subsequently causes death or bodily injury. In addition, the National Traffic and Motor Vehicle Safety Act authorizes NHTSA to require a manufacturer to recall and repair vehicles that contain safety defects or fail to comply with U.S. federal motor vehicle safety standards. Sales into foreign countries may be subject to similar regulations. If Innoviz cannot rapidly address any safety concerns or defects with its products, its business, results of operations and financial condition may be adversely affected.

The U.S. Department of Transportation has issued regulations that require manufacturers of certain autonomous vehicles to provide documentation covering specific topics to regulators, such as how automated

 

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systems detect objects on the road, how information is displayed to drivers, what cybersecurity measures are in place and the methods used to test the design and validation of autonomous driving systems. As cars that carry Innoviz’s sensors go into production, the obligations of complying with safety regulations could increase and it could require increased resources and adversely affect Innoviz’s business.

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

Innoviz’s current and potential future operations and sales subject it 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 Innoviz’s operations and the development of its business. While, generally, Innoviz does not have access to, collect, store, process, or share information collected by its solutions unless its customers choose to proactively provide such information to us, Innoviz’s 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 Innoviz’s business is rapidly evolving across jurisdictions and remains uncertain at this time.

Innoviz may also be affected by cyber attacks and other means of gaining unauthorized access to its products, systems, and data. For instance, cyber criminals or insiders may target Innoviz or third-parties with which it has business relationships in an effort to obtain data, or in a manner that disrupts Innoviz’s operations or compromises its products or the systems into which its products are integrated. Cyber criminals could also target accessing Innoviz systems in a manner which could impact its sensor data.

Innoviz is assessing the continually evolving privacy and data security regimes and measures it believes are appropriate in response. Since these data security regimes are evolving, uncertain and complex, especially for a global business like Innoviz’s, it may need to update or enhance its compliance measures as its products, markets and customer demands further develop and these updates or enhancements may require implementation costs. The compliance measures Innoviz does adopt may prove ineffective. Any failure, or perceived failure, by Innoviz 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 Innoviz, 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 its reputation and brand, loss of proprietary information and data, disruption to its 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 Innoviz, which could have an adverse effect on its reputation and business.

Innoviz may be exposed to liabilities under the U.S. Foreign Corrupt Practices Act and other U.S. and foreign anti-corruption anti-money laundering, export control, sanctions, and other trade laws and regulations, and any determination that we violated these laws could have a material adverse effect on our business.

Innoviz is subject to export control 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 Control. Innoviz is also subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, the United Kingdom Bribery Act 2010, the Proceeds of Crime Act 2002, and possibly other anti-bribery and anti-money laundering laws in

 

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countries outside of the United States in which Innoviz conducts its activities. Compliance with these laws has been the subject of increasing focus and activity by regulatory authorities, both in the United States and elsewhere, in recent years. Anti-corruption laws are interpreted broadly and prohibit companies and their employees and third-party intermediaries from authorizing, promising, offering, providing, soliciting, or accepting, directly or indirectly, improper payments or benefits to or from any person whether in the public or private sector. Innoviz’s activities outside the United States may create the risk of unauthorized payments or offers of payments by employees, consultants, sales agents or distributors, even though they may not always be subject to Innoviz’s control. It is Innoviz’s policy to implement safeguards to discourage these practices by its employees, consultants, sales agents and distributors. However, Innoviz’s existing safeguards and any future improvements may prove to be less than effective, and its employees, consultants, sales agents, or distributors may engage in conduct for which Innoviz might be held responsible, even if it does not explicitly authorize such activities.

Noncompliance with anti-corruption, anti-money laundering, export control, sanctions, and other trade laws could subject Innoviz to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage and other collateral consequences. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if Innoviz does not prevail in any possible civil or criminal litigation, its business, results of operations and financial condition could be materially harmed. Responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense and compliance costs and other professional fees. In addition, the U.S. government may seek to hold Innoviz liable for successor liability for FCPA violations committed by companies in which it invests or that it acquires. As a general matter, enforcement actions and sanctions could harm Innoviz’s business, results of operations, and financial condition.

Regulations related to conflict minerals may cause Innoviz to incur additional expenses and could limit the supply and increase the costs of certain metals used in the manufacturing of its products.

Innoviz is subject to the requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, that will require it to determine, disclose and report whether its products contain conflict minerals. The implementation of these requirements could adversely affect the sourcing, availability and pricing of the materials used in the manufacture of components used in Innoviz’s products. In addition, Innoviz will incur additional costs to comply with the disclosure requirements, including costs related to conducting diligence procedures to determine the sources of conflict minerals that may be used in or necessary to the production of its products and, if applicable, potential changes to products, processes or sources of supply as a consequence of such verification activities. It is also possible that its reputation may be adversely affected if Innoviz determines that certain of its products contain minerals not determined to be conflict-free or if Innoviz is unable to alter its products, processes or sources of supply to avoid use of such materials.

Risks Related to Being a Public Company

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

Upon the completion of the Business Combination, Innoviz will become a public company subject to reporting requirements in the United States, and it will incur significant legal, accounting and other expenses that it did not incur as a private company, and these expenses may increase even more after Innoviz is no longer an emerging growth company, as defined in Section 2(a) of the Securities Act. As a public company, Innoviz will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq. Innoviz’s management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, Innoviz expects these rules and regulations to substantially increase its legal and financial compliance costs and to make some activities more time-consuming and costly. The increased costs will increase

 

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Innoviz’s net loss. For example, Innoviz expects these rules and regulations to make it more difficult and more expensive for it to obtain director and officer liability insurance and it may be forced to accept reduced policy limits or incur substantially higher costs to maintain the same or similar coverage. Innoviz cannot predict or estimate the amount or timing of additional costs it may incur to respond to these requirements. The impact of these requirements could also make it more difficult for Innoviz to attract and retain qualified persons to serve on its board of directors, its board committees or as executive officers.

A market for Innoviz’s securities may not develop or be sustained, which would adversely affect the liquidity and price of our securities.

Following the Business Combination, the price of Innoviz’s securities may fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for Innoviz’s securities following the Business Combination may never develop or, if developed, it may not be sustained. In addition, the price of Innoviz’s securities after the Business Combination can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports. Additionally, if Innoviz’s securities become delisted from Nasdaq and are quoted on the OTC Bulletin Board (an inter-dealer automated quotation system for equity securities that is not a national securities exchange) or the combined company’s securities are not listed on Nasdaq and are quoted on the OTC Bulletin Board, the liquidity and price of Innoviz’s securities may be more limited than if Innoviz was quoted or listed on the NYSE, Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

Innoviz’s internal controls over financial reporting may not be effective and its independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on Innoviz’s business and reputation.

After the Business Combination, the combined company will carry out Innoviz’s business and will be subject to the reporting requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq. Innoviz expects that the requirements of these rules and regulations will continue to increase its legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on its personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that Innoviz maintain effective disclosure controls and procedures and internal control over financial reporting. Innoviz is continuing to develop and refine its disclosure controls, internal control over financial reporting and other procedures that are designed to ensure that information required to be disclosed by it in the reports that it will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to Innoviz’s principal executive and financial officers.

Innoviz’s current controls and any new controls that it develops may become inadequate because of changes in conditions in its business. Further, weaknesses in Innoviz’s internal controls may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could adversely affect Innoviz’s operating results or cause it to fail to meet its reporting obligations and may result in a restatement of Innoviz’s financial statements for prior periods. Any failure to implement and maintain effective internal controls also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of Innoviz’s internal control over financial reporting that it is required to include in its periodic reports Innoviz will file with the SEC under Section 404 of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in Innoviz’s reported financial and other information.

In order to maintain and improve the effectiveness of its disclosure controls and procedures and internal control over financial reporting, Innoviz has expended and anticipates that it will continue to expend significant

 

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resources, including accounting-related costs, and provide significant management oversight. Any failure to maintain the adequacy of its internal controls, or consequent inability to produce accurate financial statements on a timely basis, could increase Innoviz’s operating costs and could materially and adversely affect its ability to operate its business. In the event that Innoviz’s internal controls are perceived as inadequate or that it is unable to produce timely or accurate financial statements, investors may lose confidence in Innoviz’s operating results and the stock price of the combined company could decline. In addition, if Innoviz is unable to continue to meet these requirements, the combined company may not be able to obtain or maintain listing on Nasdaq.

The combined company’s independent registered public accounting firm is not required to formally attest to the effectiveness of its internal control over financial reporting until after the combined company is no longer an emerging growth company. At such time, the combined company’s independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which Innoviz’s controls are documented, designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on the combined company’s business and operating results.

Risks Related to Ownership of the Combined Company’s Shares

The Innoviz Articles and Israeli law could prevent a takeover that shareholders consider favorable and could also reduce the market price of Innoviz ordinary shares.

Certain provisions of Israeli law and the Innoviz Articles could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire Innoviz or for Innoviz’s shareholders to elect different individuals to its board of directors, even if doing so would be beneficial to its shareholders, and may limit the price that investors may be willing to pay in the future for the Innoviz ordinary shares. For example, Israeli corporate law regulates mergers, requires that a tender offer be effected when certain thresholds of percentage ownership of voting power in a company are exceeded (subject to certain conditions) and establishes a high ownership threshold to squeeze out minority shareholders in a full tender offer. Further, Israeli tax considerations may make potential transactions undesirable to Innoviz or to some of its shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. See the section titled “Material Israeli Tax Considerations—Taxation of our shareholders.”

Innoviz does not intend to pay dividends for the foreseeable future. Accordingly, you may not receive any return on investment unless you sell your Innoviz ordinary shares for a price greater than the price you paid for the Collective Growth Common Stock.

Innoviz has never declared or paid any cash dividends on its shares. It currently intends to retain all available funds and any future earnings for use in the operation of its business and does not anticipate paying any dividends on the Innoviz ordinary shares in the foreseeable future. Consequently, you may be unable to realize a gain on your investment except by selling sell such shares after price appreciation, which may never occur.

Innoviz’s board of directors has sole discretion whether to pay dividends. If Innoviz’s board of directors decides to pay dividends, the form, frequency, and amount will depend upon its future, operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that its directors may deem relevant. The Companies Law imposes restrictions on Innoviz’s ability to declare and pay dividends. See the section titled “Description of Innoviz Ordinary Shares—Dividend and Liquidation Rights” for additional information. Payment of dividends may also be subject to Israeli withholding taxes. See the section titled “Material Israeli Tax Considerations” for additional information.

The Innoviz ordinary shares and Innoviz warrants may not be listed on a national securities exchange after the Business Combination, which could limit investors’ ability to make transactions in such securities and subject Innoviz to additional trading restrictions.

Innoviz intends to apply to have the Innoviz ordinary shares and Innoviz warrants approved for listing on Nasdaq after the consummation of the business combination. Innoviz will be required to meet certain initial

 

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listing requirements to be listed, including having a minimum number of round lot shareholders. Innoviz may not be able to meet the initial listing requirements in connection with the Business Combination. Further, even if the Innoviz ordinary shares and Innoviz warrants are so listed, Innoviz may be unable to maintain the listing of such securities in the future. If Innoviz fails to meet the initial listing requirements and Nasdaq does not list the Innoviz ordinary shares and Innoviz warrants (and the related closing condition with respect to the listing of the Innoviz ordinary shares is waived by the parties), Innoviz could face significant material adverse consequences, including:

 

   

a limited availability of market quotations for the Innoviz ordinary shares and Innoviz warrants;

 

   

a reduced level of trading activity in the secondary trading market for the Innoviz ordinary shares and Innoviz warrants;

 

   

a limited amount of news and analyst coverage for Innoviz;

 

   

a decreased ability to issue additional securities or obtain additional financing in the future; and

 

   

Innoviz’s securities would not be “covered securities” under the National Securities Markets Improvement Act of 1996, which is a federal statute that prevents or pre-empts the states from regulating the sale of certain securities, including securities listed on Nasdaq, in which case Innoviz’s securities would be subject to regulation in each state where Innoviz offers and sells securities.

The market price and trading volume of the Innoviz ordinary shares may be volatile and could decline significantly following the Business Combination.

The stock markets, including Nasdaq on which Innoviz intends to list the Innoviz ordinary shares and Innoviz warrants to be issued in the Business Combination under the symbol “INVZ,” and “INVZW,” respectively, have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for the Innoviz ordinary shares and Innoviz warrants following the Business Combination, the market price of the Innoviz ordinary shares and Innoviz warrants Ordinary Shares may be volatile and could decline significantly. In addition, the trading volume in the Innoviz ordinary shares and Innoviz warrants may fluctuate and cause significant price variations to occur. If the market price of the Innoviz ordinary shares and Innoviz warrants Ordinary Shares declines significantly, you may be unable to resell your shares or warrants at or above the market price of the Ordinary Shares Innoviz ordinary shares and Innoviz warrants as of the date immediately following the consummation of the Business Combination. Innoviz and Collective Growth cannot assure you that the market price of the Innoviz ordinary shares and Innoviz warrants Ordinary Shares will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:

 

   

the realization of any of the risk factors presented in this proxy statement/prospectus;

 

   

actual or anticipated differences in Innoviz’s estimates, or in the estimates of analysts, for Innoviz’s revenues, Adjusted EBITDA, results of operations, level of indebtedness, liquidity or financial condition;

 

   

additions and departures of key personnel;

 

   

failure to comply with the requirements of Nasdaq;

 

   

failure to comply with the Sarbanes-Oxley Act or other laws or regulations;

 

   

future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of our securities including due to the expiration of contractual lock-up agreements;

 

   

publication of research reports about Innoviz;

 

   

the performance and market valuations of other similar companies;

 

   

failure of securities analysts to initiate or maintain coverage of Innoviz, changes in financial estimates by any securities analysts who follow Innoviz or Innoviz’s failure to meet these estimates or the expectations of investors;

 

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new laws, regulations, subsidies, or credits or new interpretations of existing laws applicable to Innoviz;

 

   

commencement of, or involvement in, litigation involving Innoviz;

 

   

broad disruptions in the financial markets, including sudden disruptions in the credit markets;

 

   

speculation in the press or investment community;

 

   

actual, potential or perceived control, accounting or reporting problems;

 

   

changes in accounting principles, policies and guidelines; and

 

   

other events or factors, including those resulting from infectious diseases, health epidemics and pandemics (including the ongoing COVID-19 public health emergency), natural disasters, war, acts of terrorism or responses to these events.

In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on us.

Innoviz’s quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality and other factors, some of which are beyond its control, resulting in a decline in its stock price.

Innoviz’s quarterly operating results may fluctuate significantly because of several factors, including:

 

   

labor availability and costs for hourly and management personnel;

 

   

profitability of Innoviz’s products, especially in new markets and due to seasonal fluctuations;

 

   

changes in interest rates;

 

   

impairment of long-lived assets;

 

   

macroeconomic conditions, both nationally and locally;

 

   

changes in consumer preferences and competitive conditions;

 

   

expansion to new markets; and

 

   

fluctuations in commodity prices.

If, following the Business Combination, securities or industry analysts do not publish or cease publishing research or reports about Innoviz, its business, or its market, or if they change their recommendations regarding the Innoviz ordinary shares adversely, then the price and trading volume of the Innoviz ordinary shares could decline.

The trading market for the Innoviz ordinary shares is influenced by the research and reports that industry or financial analysts publish about us or our business. Innoviz does not control these analysts, or the content and opinions included in their reports. As a new public company, Innoviz may be slow to attract research coverage and the analysts who publish information about the Innoviz ordinary shares will have had relatively little experience with Innoviz, which could affect their ability to accurately forecast Innoviz’s results and make it more likely that Innoviz fails to meet their estimates. In the event Innoviz obtains industry or financial analyst coverage, if any of the analysts who cover Innoviz issues an inaccurate or unfavorable opinion regarding it, Innoviz’s share price would likely decline. In addition, the share prices of many companies in the technology industry have declined significantly after those companies have failed to meet, or significantly exceed, the financial guidance publicly announced by the companies or the expectations of analysts. If Innoviz’s financial results fail to meet, or significantly exceed, its announced guidance or the expectations of analysts or public investors, analysts could downgrade the Innoviz ordinary shares or publish unfavorable research about it. If one or more of these analysts cease coverage of Innoviz or fail to publish reports on it regularly, Innoviz’s visibility in the financial markets could decrease, which in turn could cause its share price or trading volume to decline.

 

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Innoviz’s failure to meet the continued listing requirements of Nasdaq could result in a delisting of its Securities.

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

Innoviz will qualify as an emerging growth company within the meaning of the Securities Act, and if Innoviz takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make Innoviz’s securities less attractive to investors and may make it more difficult to compare Innoviz’s performance with other public companies.

Innoviz is eligible to be treated as an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised financial accounting standards until such time as those standards apply to private companies. Innoviz intends to take advantage of this extended transition period under the JOBS Act for adopting new or revised financial accounting standards.

For as long as Innoviz continues to be an emerging growth company, it may also take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including presenting only limited selected financial data and not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result, its shareholders may not have access to certain information that they may deem important. Innoviz could be an emerging growth company for up to five years, although circumstances could cause it to lose that status earlier, including if its total annual gross revenue exceeds $1.07 billion, if it issues more than $1.0 billion in non-convertible debt securities during any three-year period, or if before that time it is a “large accelerated filer” under U.S. securities laws.

Innoviz cannot predict if investors will find Innoviz ordinary shares less attractive because it may rely on these exemptions. If some investors find Innoviz ordinary shares less attractive as a result, there may be a less active trading market for Innoviz ordinary shares and Innoviz’s share price may be more volatile. Further, there is no guarantee that the exemptions available to Innoviz under the JOBS Act will result in significant savings. To the extent that Innoviz chooses not to use exemptions from various reporting requirements under the JOBS Act, it will incur additional compliance costs, which may impact Innoviz’s financial condition.

Innoviz will be a foreign private issuer and, as a result, it will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

Upon the closing of the Business Combination, Innoviz will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because Innoviz qualifies as a foreign private issuer under the Exchange Act, it is exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (1) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (2) the sections of the Exchange Act

 

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requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, although it is subject to Israeli laws and regulations with regard to notice of shareholder meetings and intends to furnish comparable financial quarterly information and its proxy statements on Form 6-K. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year and U.S. domestic issuers that are large accelerated filers are required to file their annual report on Form 10-K within 60 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD, which is intended to prevent issuers from making selective disclosures of material information. As a result of all of the above, you may not have the same protections afforded to shareholders of a company that is not a foreign private issuer.

Innoviz may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, Innoviz is a foreign private issuer, and therefore is not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to Innoviz on June 30, 2021. In the future, Innoviz would lose its foreign private issuer status if (1) more than 50% of its outstanding voting securities are owned by U.S. residents and (2) a majority of its directors or executive officers are U.S. citizens or residents, or it fails to meet additional requirements necessary to avoid loss of foreign private issuer status. If Innoviz loses its foreign private issuer status, it will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. Innoviz would also have to mandatorily comply with U.S. federal proxy requirements, and its officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, it would lose its ability to rely upon exemptions from certain corporate governance requirements under the listing rules of Nasdaq. As a U.S. listed public company that is not a foreign private issuer, Innoviz would incur significant additional legal, accounting and other expenses that it will not incur as a foreign private issuer.

As Innoviz is a “foreign private issuer” and intends to follow certain home country corporate governance practices, its shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

As a foreign private issuer, Innoviz has the option to follow certain home country corporate governance practices rather than those of Nasdaq, provided that it discloses the requirements it is not following and describes the home country practices it is following. Innoviz intends to rely on this “foreign private issuer exemption” with respect to the Nasdaq rules for shareholder meeting quorums and Nasdaq rules requiring shareholder approval. Innoviz may in the future elect to follow home country practices with regard to other matters. As a result, its shareholders may not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

Risks Related to Innoviz’s Incorporation and Location in Israel

Conditions in Israel could materially and adversely affect our business.

Many of Innoviz’s employees, including certain management members operate from its offices that are located in Rosh Ha-Ay’in, Israel. In addition, a number of Innoviz’s officers and directors are residents of Israel. Accordingly, political, economic, and military conditions in Israel and the surrounding region may directly affect Innoviz’s business and operations. In recent years, Israel has been engaged in sporadic armed conflicts with Hamas, an Islamist terrorist group that controls the Gaza Strip, with Hezbollah, an Islamist terrorist group that controls large portions of southern Lebanon, and with Iranian-backed military forces in Syria. In addition, Iran

 

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has threatened to attack Israel and may be developing nuclear weapons. Some of these hostilities were accompanied by missiles being fired from the Gaza Strip against civilian targets in various parts of Israel, including areas in which Innoviz’s employees are located, and negatively affected business conditions in Israel. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its trading partners could adversely affect our operations and results of operations.

Innoviz’s commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, Innoviz cannot assure you that this government coverage will be maintained or that it will sufficiently cover Innoviz’s potential damages. Any losses or damages incurred by Innoviz could have a material adverse effect on its business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm our results of operations.

Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on Innoviz’s results of operations, financial condition or the expansion of its business. A campaign of boycotts, divestment, and sanctions has been undertaken against Israel, which could also adversely affect Innoviz’s business. Actual or perceived political instability in Israel or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy and, in turn, Innoviz’s business, financial condition, results of operations, and prospects.

In addition, many Israeli citizens are obligated to perform several weeks of annual military reserve duty each year until they reach the age of 40 (or older, for reservists who are military officers or who have certain occupations) and, in the event of a military conflict, may be called to active duty. In response to increases in terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will be military reserve duty call-ups in the future. Innoviz’s operations could be disrupted by such call-ups, which may include the call-up of members of its management. Such disruption could materially adversely affect its business, prospects, financial condition, and results of operations.

Innoviz may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely affect our business.

A significant portion of Innoviz’s intellectual property has been developed by its employees in the course of their employment by Innoviz. Under the Israeli Patent Law, 5727-1967 (the “Patent Law”), inventions conceived by an employee in the course and as a result of his or her employment with a company are regarded as “service inventions,” which belong to the employer, absent a specific agreement between the employee and employer giving the employee service invention rights. The Patent Law also provides that if there is no such agreement between an employer and an employee, the Israeli Compensation and Royalties Committee (the “Committee”), a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for his or her inventions. Case law clarifies that the right to receive consideration for “service inventions” can be waived by the employee and that in certain circumstances, such waiver does not necessarily have to be explicit. The Committee will examine, on a case-by-case basis, the general contractual framework between the parties, using interpretation rules of the general Israeli contract laws. Further, the Committee has not yet determined one specific formula for calculating this remuneration, but rather uses the criteria specified in the Patent Law. Although Innoviz generally enters into assignment-of-invention agreements with its employees pursuant to which such individuals assign to it all rights to any inventions created in the scope of their employment or engagement with Innoviz, Innoviz may face claims demanding remuneration in consideration for assigned inventions. As a consequence of such claims, Innoviz could be required to pay additional remuneration or royalties to its current and/or former employees, or be forced to litigate such claims, which could negatively affect its business.

The tax benefits that are available to Innoviz require it to continue to meet various conditions and may be terminated or reduced in the future, which could increase Innoviz’s costs and taxes.

Innoviz may be eligible for certain tax benefits provided to “Preferred Technology Enterprises” under the Israeli Law for the Encouragement of Capital Investments, 1959, referred to as the Investment Law. In order to

 

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remain eligible for the tax benefits for “Preferred Technology Enterprises” it must continue to meet certain conditions stipulated in the Investment Law and its regulations, as amended. If these tax benefits are reduced, cancelled or discontinued, Innoviz’s Israeli taxable income from the approved enterprise would be subject to regular Israeli corporate tax rates. The standard corporate tax rate for Israeli companies in 2016 was 25% of their taxable income and was reduced to 24% in 2017 and 23% in 2018 and thereafter. Additionally, if Innoviz increase its activities outside of Israel through acquisitions, for example, its expanded activities might not be eligible for inclusion in future Israeli tax benefit programs. See “Material Israeli Tax Considerations.”

It may be difficult to enforce a U.S. judgment against Innoviz, its officers and directors and the Israeli experts named in this proxy statement/prospectus in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on Innoviz’s officers and directors and these experts.

Most of Innoviz’s directors or officers are not residents of the United States and most of their and Innoviz’s assets are located outside the United States. Service of process upon Innoviz or its non-U.S. resident directors and officers and enforcement of judgments obtained in the United States against Innoviz or its non-U.S. our directors and executive officers may be difficult to obtain within the United States. It may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against Innoviz or its non-U.S. officers and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described above. Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against Innoviz or its non-U.S. officers and directors. In addition, there is no bilateral treaty between Israel and the United States for the enforcement of civil judgments.

Moreover, among other reasons, including but not limited to, fraud or absence of due process, or the existence of a judgment which is at variance with another judgment that was given in the same matter or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel, an Israeli court will not enforce a non-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases) or if its enforcement is likely to prejudice the sovereignty or security of the State of Israel. For more information, see “Enforceability of Civil Liabilities.”

Your rights and responsibilities as a shareholder of Innoviz will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.

Innoviz is incorporated under Israeli law. The rights and responsibilities of holders of the Innoviz ordinary shares are governed by the Innoviz Articles and the Companies Law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, pursuant to the Companies Law each shareholder of an Israeli company has to act in good faith in exercising his or her rights and fulfilling his or her obligations toward the company and other shareholders and to refrain from abusing his or her power in the company, including, among other things, in voting at the general meeting of shareholders and class meetings, on amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers, and transactions requiring shareholders’ approval under the Companies Law. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or who has the power to appoint or prevent the appointment of a director or officer in the Company, or has other powers toward the Company has a duty of fairness toward the Company. However, Israeli law does not define the substance of this duty of fairness. There is limited case law available to assist in understanding the implications of these provisions that govern shareholder behavior.

 

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U.S. holders of Innoviz ordinary shares and/or Innoviz warrants may suffer adverse tax consequences if Innoviz is treated as a passive foreign investment company.

A non-U.S. corporation generally will be treated as a “passive foreign investment company” (“PFIC”) for U.S. federal income tax purposes, in any taxable year if either (1) at least 75% of its gross income for such year is passive income (such as interest income) or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income. Based on the current and anticipated composition of the income, assets and operations of Innoviz and its subsidiaries, there is a significant risk that Innoviz will be a PFIC for U.S. federal income tax purposes for the taxable year that includes the Business Combination or in future taxable years. This is a factual determination that depends on, among other things, the composition of Innoviz’s income and assets, and the market value of its shares and assets, including the composition of income and assets and the market value of shares and assets of its subsidiaries, from time to time, and thus a complete determination can only be made annually after the close of each taxable year. If Innoviz is a PFIC for any taxable year, a U.S. Holder of Innoviz ordinary shares may be subject to adverse tax consequences and may incur certain information reporting obligations. Under the PFIC rules, unless such U.S. Holder makes an election available under the Code (which election could itself have adverse consequences for such U.S. Holder), such U.S. Holder may be subject to U.S. federal income tax at the then prevailing maximum rates on ordinary income and possibly an “interest” charge, in respect of “excess distributions” and upon any gain from the disposition of Innoviz ordinary shares, as if the excess distribution or gain had been recognized ratably over such U.S. Holder’s holding period of the Innoviz ordinary shares. Certain elections (including a qualified electing fund or a mark-to-market election) available to U.S. Holders of Innoviz ordinary shares to mitigate some of the adverse tax consequences resulting from PFIC treatment, however, are not available with respect to the Innoviz warrants. For a further discussion, see “Material U.S. Federal Income Tax Considerations—U.S. Holders—Passive Foreign Investment Company Rules.” U.S. Holders of Innoviz ordinary shares and Innoviz warrants are strongly encouraged to consult their own advisors regarding the potential application of these rules to Innoviz and the ownership of Innoviz ordinary shares and/or Innoviz warrants.

If a United States person is treated as owning at least 10% of Innoviz’s shares, such person may be subject to adverse U.S. federal income tax consequences.

If a United States person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of Innoviz’s shares, such person may be treated as a “United States shareholder” with respect to each of Innoviz and any of its direct and indirect foreign affiliates (“Innoviz Group”) that is a “controlled foreign corporation.” If the Innoviz Group includes one or more U.S. subsidiaries, certain of Innoviz’s non-U.S. subsidiaries could be treated as controlled foreign corporations regardless of whether Innoviz is treated as a controlled foreign corporation (although there are recently issued final and currently proposed Treasury Regulations that may limit the application of these rules in certain circumstances).

A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of the controlled foreign corporation’s “Subpart F income” and, in computing its “global intangible low-taxed income,” “tested income” and a pro rata share of the amount of U.S. property (including certain stock in U.S. corporations and certain tangible assets located in the United States) held by the controlled foreign corporation regardless of whether such controlled foreign corporation makes any distributions. The amount includable by a United States shareholder under these rules is based on a number of factors, including potentially, but not limited to, the controlled foreign corporation’s current earnings and profits (if any), tax basis in the controlled foreign corporation’s assets, and foreign taxes paid by the controlled foreign corporation on its underlying income. Failure to comply with these reporting obligations (or related tax payment obligations) may subject such United States shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such United States shareholder’s U.S. federal income tax return for the year for which reporting (or payment of tax) was due from starting. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S.

 

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corporation. Innoviz cannot provide any assurances that it will assist holders in determining whether any of its non-U.S. subsidiaries are treated as a controlled foreign corporation or whether any holder is treated as a United States shareholder with respect to any of such controlled foreign corporations or furnish to any holder information that may be necessary to comply with reporting and tax paying obligations.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS; MARKET, RANKING AND OTHER INDUSTRY DATA

This proxy statement/prospectus contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this proxy statement/prospectus, including statements regarding Innoviz’s, Collective Growth’s or the combined company’s future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential” or the negative of these terms or other similar expressions. Forward-looking statements include, without limitation, Innoviz’s or Collective Growth’s expectations concerning the outlook for their or the combined company’s business, productivity, plans and goals for future operational improvements and capital investments, operational performance, future market conditions or economic performance and developments in the capital and credit markets and expected future financial performance, as well as any information concerning possible or assumed future results of operations of the combined company as set forth in the sections of this proxy statement/prospectus titled “Proposal One—The Business Combination Proposal—Collective Growth’s Reasons for the Business Combination.Forward-looking statements also include statements regarding the expected benefits of the proposed Business Combination between Innoviz and Collective Growth.

Forward-looking statements involve a number of risks, uncertainties and assumptions, and actual results or events may differ materially from those projected or implied in those statements. Important factors that could cause such differences include, but are not limited to:

 

   

Innoviz is an early stage company with a history of losses, and expects to incur significant expenses and continuing losses for the foreseeable future;

 

   

Innoviz’s limited operating history and evolving business model makes evaluating its business and future prospects difficult and may increase the risk of your investment;

 

   

Innoviz is creating innovative technology by designing and developing unique components. The high price of or low yield in these components may affect Innoviz’s ability to sell at competitive prices, or may lead to losses;

 

   

Innoviz expects to invest substantially in research and development for the purpose of developing and commercializing new products, and these investments could significantly reduce its profitability or increase its losses and may not generate revenue for Innoviz;

 

   

Innoviz may experience significant delays in the design, production and launch of its LiDAR products for autonomous driving systems, which could harm its business, prospects, financial condition and operating results;

 

   

Innoviz is substantially dependent on its design win with BMW and its relationship with Magna, and its business could be materially and adversely affected if the BMW L3 Program was terminated

 

   

The period of time from a design win to implementation is long and Innoviz is subject to the risks of not achieving design wins, cancellation or postponement of contracts or unsuccessful implementation;

 

   

Innoviz may need to raise additional funds in the future in order to execute its business plan and these funds may not be available to Innoviz when it needs them. If Innoviz cannot raise additional funds when it needs them, its business, prospects, financial condition and operating results could be negatively affected;

 

   

If market adoption of LiDAR for autonomous vehicles does not continue to develop, or develops more slowly than Innoviz expects, its business will be adversely affected;

 

   

Innoviz targets many customers that are large companies with substantial negotiating power, exacting product standards and potentially competitive internal solutions. If Innoviz is unable to sell its products to these customers, its prospects and results of operations will be adversely affected;

 

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Innoviz continues to implement strategic initiatives designed to grow its business. These initiatives may prove more costly than it currently anticipates and Innoviz may not succeed in increasing its revenue in an amount sufficient to offset the costs of these initiatives and to achieve and maintain profitability;

 

   

The markets in which Innoviz competes are characterized by rapid technological change, which requires Innoviz to continue to develop new products and product innovations, and could adversely affect market adoption of its products;

 

   

Certain of Innoviz’s strategic, development and supply arrangements could be terminated or may not materialize into long-term contract partnership arrangements;

 

   

Innoviz may experience difficulties in managing its growth and expanding its operations;

 

   

Continued pricing pressures, automotive OEM cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle or technology programs may result in lower than anticipated margins, or losses, which may adversely affect Innoviz’s business; and

 

   

The other matters described in the section titled “Risk Factors” beginning on page 15.

In addition, the Business Combination is subject to the satisfaction of the conditions to the completion of the Business Combination set forth in the Business Combination Agreement and the absence of events that could give rise to the termination of the Business Combination Agreement, the possibility that the Business Combination does not close, and risks that the proposed Business Combination disrupts current plans and operations and business relationships, or poses difficulties in attracting or retaining employees for Innoviz.

Innoviz and Collective Growth caution you against placing undue reliance on forward-looking statements, which reflect current beliefs and are based on information currently available as of the date a forward-looking statement is made. Forward-looking statements set forth herein speak only as of the date of this proxy statement/prospectus. Neither Innoviz nor Collective Growth undertakes any obligation to revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs. In the event that any forward-looking statement is updated, no inference should be made that Innoviz or Collective Growth will make additional updates with respect to that statement, related matters, or any other forward-looking statements. Any corrections or revisions and other important assumptions and factors that could cause actual results to differ materially from forward-looking statements, including discussions of significant risk factors, may appear, up to the consummation of the Business Combination, in Collective Growth’s public filings with the SEC or, upon and following the consummation of the Business Combination, in Innoviz’s public filings with the SEC, which are or will be (as appropriate) accessible at www.sec.gov, and which you are advised to consult. For additional information, please see the section titled “Where You Can Find More Information” beginning on page 230.

Market, ranking and industry data used throughout this proxy statement/prospectus, including statements regarding market size and technology adoption rates, is based on the good faith estimates of Innoviz’s management, which in turn are based upon Innoviz’s Management’s review of internal surveys, independent industry surveys and publications, including reports by Frost and Sullivan, IHS Markit, Wall-Street Research and other third party research and publicly available information. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While Innoviz is not aware of any misstatements regarding the industry data presented herein, its estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” and “Innoviz’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this proxy statement/prospectus.

 

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SPECIAL MEETING OF COLLECTIVE GROWTH STOCKHOLDERS

General

Collective Growth is furnishing this proxy statement/prospectus to its stockholders as part of the solicitation of proxies by its board of directors for use at the special meeting of Collective Growth stockholders and at any adjournment or postponement thereof. This proxy statement/prospectus provides you with information you need to know to be able to vote or instruct your vote to be cast at the special meeting.

Date, Time and Place of Special Meeting of Collective Growth’s Stockholders

The special meeting will be held on March 31, 2021, at 9:00 a.m., Eastern time, solely over the Internet by means of a live audio webcast. You may attend the special meeting webcast by accessing the web portal located at https://www.cstproxy.com/collectivegrowthcorp/sm2021 and following the instructions set forth on your proxy card.

Purpose of the Collective Growth Special Meeting

At the special meeting, Collective Growth is asking its stockholders:

 

  1.

Proposal No. 1—The Business Combination Proposal—to consider and vote upon a proposal to approve and adopt the Business Combination Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A, and the transactions contemplated therein, including the Business Combination;

 

  2.

Proposal No. 2—The Charter Proposals—to approve the following material differences between the SPAC Charter and Innoviz Articles to be effective upon the consummation of the Business Combination: (i) the name of the new public entity will be “Innoviz Technologies Ltd.” as opposed to “Collective Growth Corporation”; (ii) the Innoviz Articles will provide for one class of ordinary shares as opposed to the two classes of Collective Growth Common Stock provided for in the SPAC Charter; (iii) Innoviz’s corporate existence is perpetual as opposed to Collective Growth’s corporate existence terminating if a business combination is not consummated within a specified period of time; and (iv) the Innoviz Articles will not include the various provisions applicable only to special purpose acquisition corporations that the SPAC Charter contains;

 

  3.

Proposal No. 3—The Adjournment Proposal—to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, if the parties are not able to consummate the Business Combination.

Recommendation of Collective Growth Board of Directors

Collective Growth’s board of directors has determined that each of the proposals outlined above is fair to and in the best interests of Collective Growth and its stockholders and recommended that Collective Growth stockholders vote “FOR” the business combination proposal, “FOR” each of the charter proposals, and “FOR” the adjournment proposal, if presented.

Record Date; Persons Entitled to Vote

Collective Growth Stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned shares of Collective Growth Common Stock at the close of business on March 4, 2021, which is the record date for the special meeting. Stockholders will have one vote for each share of Collective Growth Common Stock 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, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. Collective Growth’s Warrants do not have voting rights. On the record date, there were 19,012,500 shares of Collective Growth Common Stock outstanding, of which 15,000,000 were public shares.

 

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Quorum

A quorum is the minimum number of shares of Collective Growth Common Stock that must be present to hold a valid meeting. A quorum will be present at the Collective Growth special meeting if a majority of all the outstanding shares of Collective Growth Common Stock entitled to vote at the meeting are represented at the virtual special meeting or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum. The Class A Stock and Class B Stock are entitled vote together as a single class on all matters to be considered at the special meeting

Vote Required

The proposals to be presented at the special meeting will require the following votes:

Business Combination Proposal —The approval of the business combination proposal will require the affirmative vote of the holders of a majority of the then outstanding shares of Collective Growth Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” the business combination proposal. Brokers are not entitled to vote on the business combination proposal absent voting instructions from the beneficial holder and, consequently, broker non-votes will have no effect on the business combination proposal. The Transactions will not be consummated if Collective Growth has less than $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) either immediately prior to or upon consummation of the Transactions.

Charter Proposals —The approval of each of the charter proposals will require the affirmative vote of the holders of a majority of the Collective Growth Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” the charter proposals. The charter proposal to approve “Innoviz Technologies Ltd.” as the name of the new public entity is a routine proposal and, accordingly, your broker, bank or nominee may vote your shares with respect to such proposal without receiving voting instructions. Consequently, there should be no broker non-votes with respect to such proposal. Each other charter proposal is considered a non-routine proposal, and, accordingly, brokers are not entitled to vote on those proposals without receiving voting instructions, and broker non-votes will have no effect with respect to such proposals.

Adjournment Proposal —The approval of the adjournment proposal will require the affirmative vote of the holders of a majority of the shares of Collective Growth Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” the adjournment proposal. Brokers are entitled to vote on the adjournment proposal absent voting instructions from the beneficial holder because the proposal is considered “routine”. Consequently, there should be no broker non-votes with respect to the adjournment proposal.

Voting Your Shares

If you are a holder of record of Collective Growth Common Stock, there are two ways to vote your shares of Collective Growth Common Stock at the special meeting:

 

   

By Mail. You may vote by proxy by completing the enclosed proxy card and returning it in the postage-paid return envelope. 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 “FOR” all of the proposals in accordance with the recommendation of the Collective Growth board of directors. Proxy cards received after a matter has been voted upon at the special meeting will not be counted.

 

   

In Person. You may attend the special meeting webcast and vote electronically using the ballot provided to you during the webcast. You may attend the special meeting webcast by accessing the web portal located at https://www.cstproxy.com/collectivegrowthcorp/sm2021. and following the instructions set forth on your proxy card. See “Questions and Answers about the Business Combination and the Special Meeting—How do I attend the special meeting?” for more information.

 

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Revoking Your Proxy

If you are a holder of record of Collective Growth Common Stock 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 to Collective Growth’s secretary with a later date so that it is received prior to the vote at the special meeting or attend the live webcast of the special meeting and vote electronically;

 

   

you may notify Collective Growth’s secretary in writing, prior to the vote at the special meeting, that you have revoked your proxy; or

 

   

you may attend the live webcast of the special meeting and vote electronically or revoke your proxy electronically, although your attendance alone will not revoke any proxy that you have previously given.

If you hold your Collective Growth Common Stock in “street name,” you may submit new instructions on how to vote your shares by contacting your broker, bank or other nominee.

Who Can Answer Your Questions About Voting Your Shares

If you are a Collective Growth stockholder and have any questions about how to vote or direct a vote in respect of your shares of Collective Growth Common Stock, you may call D.F. King & Co., Inc., Collective Growth’s proxy solicitor, at (800) 249-7120, or banks and brokers can call collect at (212) 269-5550.

Conversion Rights

Pursuant to the SPAC Charter, a holder of public shares may demand that Collective Growth convert such shares into cash if the Business Combination is consummated; provided that Collective Growth may not consummate the Business Combination if it has less than $5,000,001 of net tangible assets either immediately prior to or upon consummation of the Business Combination. Holders of public shares will be entitled to receive cash for these shares only if they deliver their shares to Collective Growth’s transfer agent no later than two (2) business days prior to the special meeting. Holders of public shares do not need to affirmatively vote on the Business Combination proposal or be a holder of such public shares as of the record date to exercise conversion rights. If the Business Combination is not consummated, these shares will not be converted into cash. If a holder of public shares properly demands conversion, delivers his, her or its shares to Collective Growth’s transfer agent as described above, and the Business Combination is consummated, Collective Growth will convert each public share into a full pro rata portion of the trust account, calculated as of two (2) business days prior to the date of the special meeting. It is anticipated that this would amount to approximately $10.01 per share. If a holder of public shares exercises his, her or its conversion rights, then it will be exchanging its shares of Collective Growth Common Stock for cash and will not become a shareholder of Innoviz.

Collective Growth’s Sponsor, officers and directors do not have conversion rights with respect to any Innoviz ordinary shares owned by them, directly or indirectly.

Collective Growth requires public stockholders, whether they are a record holder or hold their shares in “street name,” to either tender their certificates to Collective Growth’s transfer agent no later than two (2) business days prior to the vote on the Business Combination or to deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker a nominal amount and it would be up to the broker whether or not to pass this cost on to the converting holder.

Any request to convert such shares once made, may be withdrawn at any time up to the vote on the proposed Business Combination. Furthermore, if a holder of a public share delivered his certificate in connection with an

 

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election of their conversion and subsequently decides prior to the vote on the Business Combination not to elect to exercise such rights, he may simply request that the transfer agent return the certificate (physically or electronically).

If the Business Combination is not approved or completed for any reason, then public shareholders who elected to exercise their conversion rights would not be entitled to convert their shares for the applicable pro rata share of the trust account. In such case, Collective Growth will promptly return any shares delivered by public holders.

Appraisal Rights

Collective Growth stockholders and holders of Collective Growth warrants do not have appraisal rights in connection with the Transactions under the DGCL.

Proxy Solicitation Costs

Proxies may be solicited by mail, telephone or in person. Collective Growth has engaged D.F. King & Co., Inc. to assist in the solicitation of proxies, and it will pay such firm $25,000 plus disbursements for such services.

Other Matters

As of the date of this proxy statement/prospectus, the Collective Growth board of directors does not know of any business to be presented at the special meeting other than as set forth in the notice accompanying this proxy statement/prospectus. If any other matters should properly come before the special meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the judgment of the persons voting the proxies.

Interests of Collective Growth’s Officers and Directors in the Transactions

In considering the recommendation of Collective Growth’s board of directors to vote in favor of approval of the business combination proposal and the charter proposals, stockholders should keep in mind that the Sponsor and Collective Growth’s directors and executive officers have interests in such proposals that are different from, or in addition to, those of Collective Growth’s stockholders generally. In particular:

 

   

If the Business Combination with Innoviz or another business combination is not consummated by November 5, 2021 (or such later date as may be approved by Collective Growth’s stockholders), Collective Growth will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, the 3,750,000 sponsor shares held by the Sponsor and Collective Growth’s directors and officers, which were acquired for an aggregate purchase price of $25,000 prior to Collective Growth’s initial public offering, would be worthless because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of approximately $42.0 million based upon the closing price of $11.20 per share of Class A Stock on Nasdaq on March 4, 2021, the record date. On the other hand, if the Business Combination is consummated, each outstanding share of Collective Growth Common Stock (other than the shares forfeited pursuant to the Forfeiture Agreement) will be converted into Innoviz ordinary shares at the Exchange Ratio.

 

   

The Sponsor purchased 1,875,000 private warrants from Collective Growth for $1.00 per private warrant and the Sponsor and certain of Collective Growth’s directors and officers purchased 262,500 private units from Collective Growth for $10.00 per private unit. These purchases took place on a private placement basis simultaneously with the consummation of the Collective Growth IPO. All of the proceeds Collective Growth received from these purchases were placed in the trust account. Such private warrants (including the warrants included in the private units) had an aggregate market value of approximately $5.7 million based upon the closing price of $2.66 per warrant on Nasdaq on

 

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March 4, 2021 and the Class A Stock underlying the private units had an aggregate market value of approximately $2.9 million based upon the closing price of $11.20 per share of Class A Common Stock on Nasdaq on March 4, 2021. The private warrants (including the warrants included in the private units) and the Class A Stock underlying the private units will become worthless if Collective Growth does not consummate a business combination by November 5, 2021 (or such later date as may be approved by Collective Growth stockholders in an amendment to the SPAC Charter). On the other hand, if the Business Combination is consummated, each outstanding whole warrant will become an Innoviz warrant exercisable to purchase one Innoviz ordinary share following consummation of the Business Combination and each outstanding share of Collective Growth Common Stock (other than the shares forfeited pursuant to the Forfeiture Agreement) will be converted into Innoviz ordinary shares at the Exchange Ratio.

 

   

If Collective Growth is unable to complete a business combination within the required time period, the Sponsor will be personally liable under certain circumstances described herein to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Collective Growth for services rendered or contracted for or products sold to Collective Growth. If Collective Growth consummates a business combination, on the other hand, Collective Growth will be liable for all such claims.

 

   

The Sponsor and Collective Growth’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Collective Growth’s behalf, such as identifying and investigating possible business targets and business combinations. However, if Collective Growth fails to consummate a business combination within the required period, they will not have any claim against the trust account for reimbursement. Accordingly, Collective Growth may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by November 5, 2021 (or such later date as may be approved by Collective Growth stockholders in an amendment to the SPAC Charter). As of the record date, the Sponsor and Collective Growth’s officers and directors and their affiliates had incurred approximately $252,000 of unpaid reimbursable expenses.

 

   

The Business Combination Agreement provides for the continued indemnification of Collective Growth’s current directors and officers and the continuation of directors and officers liability insurance covering Collective Growth’s current directors and officers.

 

   

Collective Growth’s officers and directors (or their affiliates) may make loans from time to time to Collective Growth to fund certain capital requirements. Such loans may be repaid at the Closing or, in the option of the holder, up to $750,000 of such loans may be converted into Collective Growth warrants immediately prior to the Closing at a price of $1.00 per warrant and up to $750,000 of such loans may be converted into Collective Growth units at a price of $10.00 per unit. As of the date of this proxy statement/prospectus, an aggregate of $100,000 in such loans were made by the Sponsor. Additional loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to Collective Growth outside of the trust account.

Purchases of Collective Growth Shares

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding Collective Growth or its securities, the Sponsor, Collective Growth’s officers and directors, Innoviz, Innoviz shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase 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 shares of Collective Growth Common Stock or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to consummate the Business Combination where it appears that such requirements would otherwise not be met.

 

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While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and, with Innoviz’s consent, the transfer to such investors or holders of shares or warrants owned by the Sponsor for nominal value.

Entering into any such arrangements may have a depressive effect on Collective Growth Common Stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the special meeting.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the business combination proposal and other proposals and would likely increase the chances that such proposals would be approved. No agreements dealing with the above arrangements or purchases have been entered into as of the date of this proxy statement/prospectus by the Sponsor, Collective Growth officers and directors, Innoviz, Innoviz shareholders or any of their respective affiliates. Desktop Metal will file a Current Report on Form 8-K to disclose arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the business combination proposal or the satisfaction of any closing conditions. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons

 

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PROPOSAL ONE—THE BUSINESS COMBINATION PROPOSAL

The following is a discussion of the proposed Business Combination and the Business Combination Agreement. This is a summary only and may not contain all of the information that is important to you. This summary is subject to, and qualified in its entirety by reference to, the Business Combination Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A. Collective Growth stockholders are urged to read this entire proxy statement/prospectus carefully, including the Business Combination Agreement, for a more complete understanding of the Business Combination.

General

Transaction Structure

The Business Combination Agreement provides for the merger of Collective Growth with and into Merger Sub, with Collective Growth surviving the Business Combination as a wholly owned subsidiary of Innoviz.

Pro Forma Capitalization

The pro forma equity valuation of Innoviz upon consummation of the Transactions is estimated to approximate $1,405,000,000. We estimate that at the Effective Time without giving effect to the issuance of Earnout Shares and assuming none of Collective Growth’s public stockholders demand of their public shares pursuant to the SPAC Charter, the securityholders of Innoviz and Company Management will own more than 75% of the outstanding Innoviz ordinary shares and the securityholders of Collective Growth, Perception, Antara, and certain accredited investors purchasing PIPE Shares will own the remaining Innoviz ordinary shares.

Merger Consideration

Pursuant to the Business Combination Agreement, at the Effective Time, (a) each share of Class A Stock outstanding immediately prior to the Effective Time will be exchanged for one Innoviz ordinary share, (b) each share of Class B Stock outstanding immediately prior to the Effective Time, after giving effect to the forfeiture of 1,875,000 shares of Class B Stock pursuant to the Forfeiture Agreement, will be exchanged for one Innoviz ordinary share, (c) each Collective Growth warrant outstanding immediately prior to the Effective Time, after giving effect to the forfeiture of 187,500 Collective Growth warrants pursuant to the Forfeiture Agreement, will be assumed by Innoviz and will become an Innoviz warrant, with the number of Innoviz ordinary shares underlying the Innoviz warrants and the exercise price of such Innoviz warrants subject to adjustment in accordance with the Business Combination Agreement, (d) Innoviz will issue to Perception 3,027,747 Innoviz warrants, (e) each outstanding Innoviz preferred share will be converted into one Innoviz ordinary share and (f) Innoviz will issue to Company Management 2,500,000 Innoviz ordinary shares and 3,500,000 Innoviz warrants, in each case less any applicable withholding taxes.

In addition, pursuant to the Business Combination Agreement, if the trading price of the Innoviz ordinary shares on Nasdaq is greater than $12.50 for any period of ten (10) trading days out of a twenty (20) consecutive trading-days at any time after the closing of the Transactions until the fourth anniversary of the date of the closing of the Transactions, (i) Innoviz will issue to Perception the Perception Earnout Shares as additional consideration for services provided by Perception to Innoviz, with the number of Innoviz ordinary shares to be issued to Perception to be calculated based on the amount of Initial Transaction Proceeds (as defined herein), and (ii) Innoviz will issue to Company Management 1,250,000 Innoviz ordinary shares, in each case less any applicable withholding taxes.

Concurrently with the execution of the Business Combination Agreement, Innoviz and Antara entered into the Put Option Agreement, pursuant to which Innoviz caused Antara Capital to subscribe for a number of Innoviz ordinary shares in the PIPE with an aggregate equity value equal to $70,000,000 pursuant to the Put Share Subscription Agreement. In consideration for entering into the Put Option Agreement, Innoviz agreed to issue to Antara Capital Master 3,784,753 Innoviz warrants and up to 3,125,000 Innoviz ordinary shares, with the number

 

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of Innoviz ordinary shares to be issued to Antara Capital Master to be calculated based on the amount of Initial Transaction Proceeds. If Innoviz issues to Perception the Perception Earnout Shares, then Innoviz will also issue to Antara Capital Master the Antara Earnout Shares, with the number of Innoviz ordinary shares to be issued to Antara to be calculated based on the amount of Initial Transaction Proceeds.

On February 17, 2021, Innoviz effected the Stock Split, to cause the value of the outstanding Innoviz ordinary shares immediately prior to the Effective Time to equal $10.00 per share.

Background of the Business Combination

The Business Combination with Innoviz is the result of an extensive search for a potential transaction utilizing the network and investing and transaction experience of Collective Growth’s management team and board of directors. The terms of the Business Combination Agreement are the result of arm’s-length negotiations between representatives of Collective Growth and Innoviz. The following is a brief discussion of the background of these negotiations, the Business Combination Agreement and the Business Combination.

The following chronology summarizes the key meetings and events that led to the signing of the Business Combination Agreement, but it does not purport to catalogue every conversation and correspondence among representatives of Collective Growth, Innoviz and their respective advisors.

On May 5, 2020, Collective Growth consummated its initial public offering of 15,000,000 units. Each unit consisted of one share of Class A Stock and one-half of one redeemable warrant to purchase one share of Class A Stock. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $150,000,000. Simultaneously with the closing of the initial public offering, the Collective Growth consummated the sale of 262,500 units (the “Private Placement Units”) at a price of $10.00 per Private Placement Unit and the sale of 1,875,000 warrants (the “Private Placement Warrants” and, together with the Private Placement Units, the “Private Placement Securities”) at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, certain other stockholders of the Collective Growth and the representative of the underwriters, generating gross proceeds of $4,500,000. Following the closing of the initial public offering on May 5, 2020, an amount of $150,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the initial public offering and the sale of the Private Placement Securities was placed in the Trust Account.

Prior to the consummation of its initial public offering, neither Collective Growth, nor anyone on its behalf, contacted any prospective target businesses or had any substantive discussions, formal or otherwise, with respect to a transaction with Collective Growth.

From the date of Collective Growth’s initial public offering through the signing of the Business Combination Agreement with Innoviz on December 10, 2020, representatives of Collective Growth, including Bruce Linton, the chief executive officer and chairman of the board of directors of Collective Growth, Geoff Whaling, the President of Collective Growth, and Wilson Kello, the Chief Marketing Officer of Collective Growth, commenced an active search for prospective acquisition targets. During this period, these representatives of Collective Growth reviewed self-generated ideas, initiated contact and were contacted by a number of individuals and entities with respect to business combination opportunities. Collective Growth’s officers and directors ultimately identified and evaluated over 170 potential target businesses from a wide range of industry segments during this period. In connection with such evaluation, representatives of Collective Growth had discussions regarding potential transactions with members of management and/or the boards of directors of certain potential acquisition targets. From the date of the initial public offering through December 10, 2020, representatives of Collective Growth met with and engaged in substantive discussions with a number of potential acquisition targets with respect to a potential business combination and discussed potential valuations and

 

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structures. These discussions resulted in the execution of five non-binding letters of intent, other than the discussions with Innoviz. The decision not to pursue any particular target business that Collective Growth evaluated generally was the result of one or more of: (i) Collective Growth’s determination that such business or combination of businesses did not represent an attractive target due to a combination of business and growth prospects, strategic direction, management teams, structure and/or valuation; (ii) a difference in initial valuation expectations between Collective Growth, on the one hand, and the target and/or its owners, on the other hand; (iii) a potential target’s unwillingness to engage in substantive discussions with Collective Growth given the timing and uncertainty of closing due to the requirement for Collective Growth to obtain stockholder approval as a condition to consummating any business combination; (iv) a potential target’s desire to remain a privately held company; or (v) a potential target’s unwillingness to engage in substantive discussions with Collective Growth in light of conflicting business objectives on the target’s side.

Collective Growth decided to pursue a combination with Innoviz because it determined that Innoviz represented a compelling opportunity based upon, among other things: Collective Growth’s and its advisors’ assessment of Innoviz’s business and growth prospects; the fact that, unlike many of Innoviz’s competitors, Innoviz is ready to deploy its technology, and has established key strategic partnerships and customer accounts; Innoviz’s experienced management team in Innoviz’s industry; the retention by Company equity holders of 100% of their equity interests in the Business Combination; and the favorable implied valuation of Innoviz compared to its peers in the Business Combination. Compared to Innoviz, Collective Growth and its advisors did not consider the other alternative combination targets to be as compelling when taking the foregoing into consideration.

On September 29, 2020, a telephone call was held with three representatives from Cantor Fitzgerald introducing Collective Growth management to partners with Northern Pacific Group (“NPG”), a private equity firm affiliated with Perception Capital Partners (“Perception”), and Antara Capital. Perception was acting as the lead sponsor of the potential transaction with Innoviz and Antara Capital was committing to participate in the PIPE. Collective Growth management was represented by Mr. Linton and Mr. Kello. Mr. Scott Honour represented NPG, where he is the Managing Director, and Perception, where he is the Chairman, and Mr. Chetan Bansal represented Antara Capital. Perception introduced Innoviz as a potential target along with the potential economics and proposed structure of the Innoviz business combination. That meeting was followed up with an email on the same day from Mr. Honour with a draft Letter of Intent (“LOI” or “Letter Agreement”) and a draft non-disclosure agreement. Mr. Linton immediately advised the Collective Growth Board of Directors of the call and the Innoviz business combination proposal by Perception and Antara Capital.

On September 30, 2020, following the meeting on September 29th, an initial draft of the LOI, or Letter Agreement, setting forth the proposed terms of a transaction between Collective Growth and Innoviz was sent by Perception, on behalf of Innoviz, to Collective Growth

On October 1, 2020, Innoviz sent a draft non-disclosure agreement to Collective Growth in order to allow Innoviz to begin sharing due diligence materials with Collective Growth to assist Collective Growth in evaluating a potential transaction with Innoviz. Following review and revision by Collective Growth’s legal counsel, Graubard Miller (“Graubard”), Collective Growth and Innoviz entered into a customary non-disclosure agreement dated October 1, 2020. Soon thereafter, beginning on October 6, 2020, Innoviz began providing financial projections and other due diligence materials to Collective Growth, including through an electronic data room on Intralinks maintained by Innoviz’s financial advisor, Goldman Sachs & Co. LLC (“Goldman Sachs”).

On a video call on October 1, 2020 requested by Mr. Linton, Perception partners Mr. Honour, Ms. Marcy Haymaker, and Mr. Patrick Williams, along with Mr. Jim Sheridan, CEO of Perception, and Mr. Eldar Cegla, CFO of Innoviz, provided a presentation on Innoviz to Collective Growth management. Collective Growth management was represented by Mr. Linton, Mr. Kello, and Mr. Whaling. The Perception partners described recent developments at Innoviz and plans for the future. Mr. Linton updated Perception regarding the special purpose acquisition company market and its participants. During that video conversation, Mr. Honour and

 

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Mr. Linton then discussed the possibility of a potential transaction between Collective Growth and Innoviz. Following this conversation, Mr. Honour and Mr. Linton made arrangements to further discuss their activities and to determine whether a transaction between Collective Growth and Innoviz would be in the best interests of Collective Growth, Innoviz and their respective shareholders. Mr. Linton then requested a formal introduction to Innoviz management to further explore the potential business combination.

On October 3, 2020, a video call was held between Collective Growth and Perception to gain a deeper understanding of Innoviz. Mr. Linton, Mr. Whaling, Mr. Kello, and Mr. Tim Saunders, Chief Financial Officer, represented Collective Growth management. In addition, Mr. Andrew Townsend, a Collective Growth director and Managing Director of Shipwright Partners, the Sponsor, also attended. Mr. Sheridan and Ms. Haymaker represented Perception where Mr. Sheridan shared his overview of the LiDAR sector and Innoviz’s competitive positioning.

On October 5, 2020, following the meeting on October 3rd, a revised draft of the Letter Agreement was sent by Perception, on behalf of Innoviz, to Collective Growth based on the discussions held between the parties up to such date. The draft of the Letter Agreement contemplated Innoviz issuing to the stockholders of Collective Growth an aggregate of 130,000,000 Innoviz ordinary shares based on $10.00 per share, being a specific reference to the $1,300,000,000 implied valuation of Innoviz based on the number of Innoviz ordinary shares to be issued to the shareholders of Collective Growth and Innoviz’s and its financial advisor’s view of the valuations of similarly situated companies. The Letter Agreement also included certain other provisions relating to restrictions on the sale of shares of Innoviz ordinary shares following consummation of the Business Combination and a contemplated $150,000,000 private placement at $10.00 per share that would close concurrently with the closing of the Business Combination for the purpose of providing additional cash to the combined company to provide working capital to execute Innoviz’s business plan and fund the combined company’s growth following the closing of the Business Combination. Matters pertaining to the number and composition of the board of directors was deferred to the definitive agreements to be settled. The draft LOI contemplated that the executed LOI, if any, would be non-binding other than with respect to certain provisions related to a 28-day mutually renewable exclusivity period, representations and warranties, a back-stop commitment by Antara Capital, fees and expenses (with each party to bear its own expenses) and confidentiality.

Preliminary business diligence requests were agreed between Innoviz by Collective Growth in early October 2020. Throughout the period from October 6, 2020 until the signing of the Business Combination Agreement, representatives of Collective Growth and its advisors conducted further analysis and held conference calls with representatives of Innoviz regarding Innoviz’s business plan, financial projections, technology and addressable market and continued their extensive business, financial, accounting, tax and legal due diligence investigations of Innoviz.

Commencing on October 6, 2020, the date on which Collective Growth and its advisors were granted access to materials in accordance with the non-disclosure agreement and continuing through the signing of the Business Combination Agreement, representatives of Collective Growth, its legal counsel, Graubard, and its Israeli counsel, Goldfarb Seligman & Co. (“Goldfarb”), conducted due diligence of Innoviz through document review and numerous telephone conference calls with representatives of Innoviz and Perception. Collective Growth’s diligence covered various areas, including, among others, commercial operations and contracts, financial results, litigation, legal compliance, intellectual property, tax and general corporate matters. In addition, Collective Growth conducted further diligence, including calls with Innoviz key suppliers, key customers, and investors, as well as competitors and industry experts, which diligence focused on, among other things, Innoviz’s products, market share, and future prospects, as well as the outlook for the sector more generally. Based on such diligence, and after internal discussions as well as feedback from its advisors, Collective Growth decided to pursue further diligence, discussions, and negotiations.

Over October 6 and October 7, 2020, management of Collective Growth and Innoviz, including Mr. Omer Keilaf, CEO, and Mr. Eldar Cegla, CFO, met by video call to discuss the final details of the LOI, including the proposed structure of the business combination, capitalization, the PIPE, exclusivity and the forfeiture of Class B

 

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Stock and warrants by the Sponsor. Also in attendance were Innoviz’s legal counsel, Latham & Watkins LLP (“Latham”), Meitar | Law Offices (“Meitar”). Goldman Sachs, financial advisors to Innoviz, and Mr. Honour.

On October 7, 2020, Collective Growth convened a special meeting of its board of directors via video conference call to discuss the proposed transaction and the draft Letter Agreement, including the implied valuation of Innoviz, and the underlying rationale for such implied valuation (which was consistent with Collective Growth’s evaluation of the business, comparable companies in analogous markets), and the number of Innoviz ordinary shares to be issued to the shareholders of Collective Growth. During the board meeting, Mr. Linton and Mr. Saunders updated Collective Growth’s board of directors on the status of discussions with Innoviz, including the principal terms of the transaction and timing considerations. Following discussion and deliberation, Collective Growth’s board of directors approved and directed the representatives of Collective Growth to continue discussions with Innoviz and enter into the Letter Agreement, subject to the changes proposed by Collective Growth that had been discussed with Innoviz earlier.

On October 7, 2020, following discussion of the changes to the Letter Agreement described above by representatives of Collective Growth, including the Board of Directors, and Innoviz and their respective financial and legal advisors, Collective Growth and Innoviz signed the revised Letter Agreement. The exclusivity period was subsequently extended by amending the Letter Agreement on November 4, 2020. The executed Letter Agreement was a necessary precursor to launching the PIPE investment process led by Goldman Sachs engaged by and on behalf of Innoviz.

At Mr. Linton’s request, Mr. Linton was introduced to the recently promoted CEO of a key strategic partner and investor of Innoviz on October 10, 2020. At the time of the call, the incoming CEO held the title of President and was responsible for the LiDAR integration program at this Tier-1 company. The President and incoming CEO provided an overview of the 27 potential LiDAR companies they looked at and the basis for ultimately selecting Innoviz as a strategic partner. The incoming CEO reaffirmed his satisfaction with the choice of Innoviz and its team, products and the opportunity presented.

As part of the ongoing due diligence review, a video call was arranged on November 9, 2020 with a T 1 automobile manufacturing customer for Innoviz who was represented by the Vice President responsible for autonomous driving sensors and integration thereof, along with the company’s head of digital cooperations strategy. Mr. Linton, Mr. Saunders, and Mr. Whaling represented Collective Growth management and were joined by Mr. Eugene Dozortsev, a Collective Growth board director. Mr. Sheridan and Mr. Honour from Perception joined the call which was hosted by Goldman Sachs. The video call provided the opportunity for the Vice President to speak to the relationship with Innoviz, how they came to select Innoviz over the field of competitors, its technology and competitive advantages, remaining challenges, and the expected market for LiDAR systems over the next five years. The Vice President also reaffirmed the company’s choice and validation of Innoviz and near-term plans for the partnership.

During the period from October 7 to December 10, 2020, over ten special board meetings, Collective Growth’s board of directors met through video and telephone calls with Mr. Linton, Mr. Whaling and Mr. Saunders to discuss a variety of matters including the LOI, an extension of the LOI exclusivity on November 4, 2020, ongoing due diligence and market intelligence, the evolution of the definitive agreements, and engaging Cantor Fitzgerald as a financial advisor to provide financial analysis and commentary in management’s and the board’s determination that the value of Innoviz was at least equal to 80% of the amount held in Collective Growth’s trust account (excluding deferred underwriting commissions), along with Cantor Fitzgerald’s diligence on Innoviz. At the October 22, 2020 board meeting, Mr. Honour and Mr. Sheridan were invited as guests to present their views of Innoviz and the opportunity over the course of a two-hour video call and respond to questions by the Collective Growth board of directors.

On October 19, 2020, Innoviz circulated an initial draft of the Business Combination Agreement prepared by Latham, which reflected the terms of the signed Letter Agreement, to Collective Growth, Graubard and Goldfarb.

 

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On November 11, 2020, Graubard circulated a revised draft of the Business Combination Agreement to Innoviz. The revised draft provided for, among other things, the conversion of Innoviz preferred shares into common shares immediately prior to the Business Combination, with the treatment of other Company securities to be determined, including the forfeited Sponsor shares, minimum cash to be maintained on closing, an exception to the interim operating covenants for actions reasonably necessary to protect the health and safety of employees and other individuals with whom Innoviz had business dealings and respond to supply or service disruptions caused by COVID-19 during any period of full or partial suspension of operations related to COVID-19, a requirement and closing condition for Collective Growth’s initial stockholders to amend their existing lock-up restrictions to be the same the lock-up restrictions applicable to Innoviz’s shareholders and certain other closing conditions.

On December 3, 2020 and December 8, 2020, representatives of Latham, Meitar, Graubard and Goldfarb held telephone and video conference calls to discuss the revised draft Business Combination Agreement, including, among other things, the treatment of Innoviz’s different classes of equity securities, the terms and structure of the proposed transaction and certain of the additional closing conditions proposed in the revised draft Business Combination Agreement. In addition, as described further below, following feedback from PIPE investors and market analysis, the implied pre-money equity valuation of Innoviz was reduced to $975.0 million, but the PIPE was increased to $200.0 million with these changes reflected in the evolving business combination agreement.

On October 14, 2020, representatives of Collective Growth, Innoviz, Perception, and Goldman Sachs commenced the discussion and preparation of wall crossing procedures to allow potential interested investors to consider participation in the proposed Innoviz PIPE in connection with the Business Combination.

During the week of October 19, 2020, representatives of Collective Growth, Innoviz and Goldman Sachs held telephone conference calls to discuss and revise marketing materials, timing and investor targeting for the proposed Innoviz PIPE Transaction. Representatives of Collective Growth and Innoviz also began to hold telephone conference calls to discuss the proposed PIPE Transaction with a certain selected group of wall-crossed investors who agreed to be subject to certain confidentiality and other restrictions in order to gain access to information related to the proposed PIPE Transaction.

During the period from October 19, 2020 to November 12, 2020 and over the course of 28 meetings hosted by Goldman Sachs, Mr. Linton joined Innoviz management and the Perception partners to present and discuss the Innoviz opportunity. The meetings with potential PIPE investors covered, among other things, Innoviz’s business model, technology and intellectual property, projections, key relationships and market positioning and provided Mr. Linton and Collective Growth with valuable insights into the third-party investors views on the opportunity and valuation thereof.

During this time, representatives of Innoviz continued to negotiate the terms of the contemplated PIPE with potential PIPE investors, including, among other things, the conditions to the closing, the registration rights granted to the investors pursuant to the proposed Subscription Agreements, representations of the investors in the PIPE and the rights of the investors in the PIPE to terminate the Subscription Agreement under certain circumstances. During this period, Innoviz’s advisors exchanged revised drafts of the Subscription Agreements with certain potential investors and their respective advisors until the Subscription Agreements were finalized with each investor on December 10, 2020. In light of increased demand by investors interested in participating in the PIPE, representatives of Innoviz, Perception and Goldman Sachs discussed and agreed to increase the size of the PIPE to an aggregate amount of $200.0 million from the originally anticipated size of $150.0 million, and to reduce the pre-money equity valuation to $975.0 million from $1.3 billion.

On December 8, 2020, the board of directors of Innoviz met by video conference and approved the Business Combination Agreement and the transactions contemplated thereby, subject to final negotiations and modifications.

 

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On December 9, 2020, the board of directors of Collective Growth met by video conference and approved the Business Combination Agreement and the transactions contemplated thereby, subject to final negotiations and modifications and a verbal presentation by Cantor Fitzgerald on the afternoon of December 10, 2020.

On December 10, 2020, Collective Growth’s board of directors met via video conference. The entire Collective Growth board of directors was present at the meeting. Also participating by invitation were Mr. Saunders, Mr. Whaling, representatives of Graubard, and Mr. David Batalion of Cantor Fitzgerald, financial advisor to Collective Growth. At the meeting, Mr. Linton and Mr. Saunders gave an extensive presentation about the proposed transaction, including potential risks relevant to Innoviz’s business, the implied valuation of Innoviz, the pro forma ownership of the post-closing combined company, the fairness to Collective Growth and its stockholders of the consideration to be paid by Collective Growth in the transaction and the value of Innoviz as a whole being at least equal to 80% of the amount held in Collective Growth’s trust account (excluding deferred underwriting commissions). Mr. Batalion was then introduced and asked to describe the competitive positioning of Innoviz in the LiDAR market and its overall valuation compared to other competitors in the market. Mr. Batalion commented favorably on the breadth of intellectual property held by Innoviz, its key strategic investors and partners, customers and management team. Mr. Batalion also discussed Innoviz’s implied valuation, as measured by the implied enterprise valuation as a multiple of publicly available projected 2021 to 2025 revenues and adjusted EBITDA, which were prepared by Innoviz’s management and are discussed in more detail elsewhere in this proxy statement/prospectus. Discussion ensued covering certain risks inherent in the projections and it was noted that the implied valuation of Innoviz compared favorably against its LiDAR peers which had recently become public companies or were in the process of going public. Mr. Batalion then left the meeting and the Collective Growth board of directors engaged in further considerable review and discussion of the proposed transaction. Representatives of Graubard then provided an overview to Collective Growth’s board of the directors with respect to their fiduciary duties under Delaware law and the terms of the Business Combination Agreement and the Ancillary Documents and responded to questions from the directors on the terms of the Business Combination Agreement and the Ancillary Documents.

On December 10, 2020, in consideration of all the factors discussed at various meetings and discussions, Collective Growth’s board of directors unanimously declared the Business Combination Agreement, the Business Combination, including the PIPE and the Transactions, were advisable and in the best interests of Collective Growth and its stockholders, and approved the form, terms and provisions of, and the transactions contemplated by, including the matters to be submitted to votes of Collective Growth’s stockholders, and authorized Collective Growth to enter into, the Business Combination Agreement and the related transaction documentation.

The Business Combination Agreement and the Ancillary Documents were signed on December 10, 2020. Prior to the market open on December 11, 2020, Collective Growth and Innoviz jointly issued a press release announcing the signing of the Business Combination Agreement, and Collective Growth filed on December 14, 2020 a Current Report on Form 8-K announcing the execution of the Business Combination Agreement and disclosing the material terms of the Business Combination Agreement in detail. The investor presentation, investor call script and press release announcing the signing of the Business Combination Agreement were furnished as exhibits to such Current Report on Form 8-K.

On December 30, 2020, Innoviz entered into an additional Subscription Agreement with an investor providing for the purchase of an additional 3 million Innoviz ordinary shares at a price of $10.00 per share, for additional gross proceeds to Innoviz of $30 million. Including the previous Subscription Agreements, the total gross proceeds to Innoviz from the sale of Innoviz ordinary shares in the PIPE will now be $230 million. On January 5, 2021, Collective Growth filed a Current Report on Form 8-K announcing the foregoing.

The parties have continued and expect to continue regular discussions in connection with, and to facilitate, the closing.

 

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Collective Growth’s Reasons for the Business Combination and Recommendation of the Board of Directors

In evaluating the Business Combination, Collective Growth’s board of directors consulted with Collective Growth’s management and legal and financial advisors. Collective Growth’s board of directors reviewed various industry and financial data in order to determine that the consideration to be paid was reasonable and that the Business Combination was in the best interests of Collective Growth’s stockholders. The financial data reviewed included the historical and projected consolidated financial statements of Innoviz, comparable publicly traded company analyses and an analysis of pro forma capital structure and trading multiples prepared by Collective Growth’s management and advisors.

Collective Growth’s management conducted a due diligence review of Innoviz that included an industry analysis, an analysis of the existing business model of Innoviz and historical and projected financial results. Collective Growth’s management, including its directors and advisors, has many years of experience in both operational management and investment and financial management and analysis and, in the opinion of Collective Growth’s board of directors, was suitably qualified to conduct the due diligence and other investigations and analyses required in connection with the search for a business combination partner. A detailed description of the experience of Collective Growth’s executive officers and directors is included in the section of this proxy statement/prospectus entitled “Collective Growth’s Business—Directors and Executive Officers.”

In reaching its unanimous resolution (i) that the terms and conditions of the Business Combination Agreement, including the proposed Business Combination, are advisable, fair to and in the best interests of Collective Growth and its stockholders and (ii) to recommend that stockholders adopt and approve the Business Combination Agreement and approve the Business Combination contemplated therein, Collective Growth’s board of directors considered a range of factors, including but not limited to, the factors discussed below. In light of the number and wide variety of factors, Collective Growth’s board of directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its determination. Collective Growth’s board of directors viewed its position as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of Collective Growth’s reasons for the Business Combination and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the section of this proxy statement/prospectus entitled “Cautionary Statement Regarding Forward-Looking Statements; Market, Ranking and Other Industry Data.”

In considering the Business Combination, Collective Growth’s board of directors gave considerable weight to the following factors:

 

   

Unique Market Position. Innoviz is well-positioned to take advantage of the dramatic adoption of its next generation, cost-effective LiDAR-based perception software and solid-state systems over the next five to ten years with the only current certified automotive-grade higher performance LiDAR system on the market today and Innoviz projects revenue in the near term of $9 million in 2021, $23 million in 2022 and $79 million in 2023 through its key strategic Tier-1 relationships (see “—Unaudited Prospective Financial Information of Innoviz” for additional information);

 

   

Existing Customer and Supplier Relationships. Innoviz has established key strategic relationships with Tier-1 customers and suppliers to validate Innoviz’s position and potential for early, mass commercial adoption of its high quality and safe L3 LiDAR while developing next-generation L2+ with Innoviz’s Tier-1 partners across U.S., Europe and China;

 

   

Experienced Leadership Team with a Proven Track Record. Innoviz is led by a management team experienced in Innoviz’s industry;

 

   

Platform for Future Development and Expansion. Its potential public company status following the consummation of the Business Combination, combined with the capital to be provided from the PIPE and possibly from Collective Growth’s trust account, is expected to provide Innoviz with an optimal platform for further developing and expanding its current programs of Level 2+, Level 3 and Level 4 LiDAR systems and software;

 

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Attractive Valuation. Collective Growth’s board of directors believes Innoviz’s implied valuation following the Business Combination relative to the current valuations experienced by comparable publicly traded companies in the LiDAR sector is favorable for Collective Growth;

 

   

Due Diligence. Collective Growth’s due diligence examinations of Innoviz and discussions with Innoviz’s management and financial and legal advisors;

 

   

Other Alternatives. Collective Growth’s board of directors believes, after a thorough review of other business combination opportunities reasonably available to Collective Growth, that the Business Combination represents the best potential business combination for Collective Growth and the most attractive opportunity for Collective Growth’s management to accelerate its business plan based upon the process utilized to evaluate and assess other potential combination targets, and Collective Growth’s board of directors’ belief that such process has not presented a better alternative; and

 

   

Negotiated Transaction. The financial and other terms of the Business Combination Agreement and the fact that such terms and conditions are reasonable and were the product of arm’s-length negotiations between Collective Growth and Innoviz.

Collective Growth’s board of directors also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:

 

   

Market Adoption. Whether the adoption of autonomous cars will occur and be widespread, and whether such adoption will rely on LiDAR rather than another technology.

 

   

Systems Update. The need to update Innoviz’s financial systems and operations necessary for a public company.

 

   

Competition. Competition in Innoviz’s industry is intense, which may cause reductions in the price Innoviz can charge for its products and services, thereby potentially lowering Innoviz’s profits;

 

   

Loss of Key Personnel. Key personnel in Innoviz’s industry is vital and competition for such personnel is intense. The loss of any key personnel could be detrimental to Innoviz’s operations;

 

   

Macroeconomic Risks. Macroeconomic uncertainty and the effects it could have on the combined company’s revenues;

 

   

Benefits Not Achieved. The risk that the potential benefits of the Business Combination may not be fully achieved or may not be achieved within the expected timeframe;

 

   

Collective Growth Stockholders Receiving Minority Position. The fact that existing Collective Growth stockholders will hold a minority position in the combined company; and

 

   

Other Risks. Various other risks associated with Innoviz’s business, as described in the section entitled “Risk Factors” appearing elsewhere in this proxy statement/prospectus.

Unaudited Prospective Financial Information of Innoviz

Innoviz does not as a matter of course make public projections as to future sales, earnings or other results. However, Innoviz management prepared and provided to the Innoviz board of directors, Innoviz’s financial advisors, Collective Growth and potential PIPE investors certain internal, unaudited prospective financial information in connection with the evaluation of the Business Combination. Innoviz management prepared such financial information based on their judgment and assumptions regarding the future financial performance of Innoviz. The inclusion of the below information should not be regarded as an indication that Innoviz or any other recipient of this information considered—or now considers—it to be necessarily predictive of actual future results.

The unaudited prospective financial information is subjective in many respects. As a result, there can be no assurance that the prospective results will be realized or that actual results will not be significantly higher or lower than estimated. Since the unaudited prospective financial information covers multiple years, that information by its nature becomes less predictive with each successive year.

 

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While presented in this proxy statement/prospectus with numeric specificity, the information set forth in the summary below was based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of Innoviz management, including, among other things, the matters described in the sections entitled “Cautionary Statement Regarding Forward-Looking Statements; Market, Ranking and Other Industry Data” and “Risk Factors.” Innoviz believes the assumptions in the prospective financial information were reasonable at the time the financial information was prepared, given the information Innoviz had at the time. However, important factors that may affect actual results and cause the results reflected in the prospective financial information not to be achieved include, among other things, risks and uncertainties relating to the Innoviz business, industry performance, the regulatory environment, and general business and economic conditions. The prospective financial information also reflects assumptions as to certain business decisions that are subject to change. The unaudited prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of Innoviz management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of Innoviz management’s knowledge and belief, the expected course of action and the expected future financial performance of Innoviz. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement/consent solicitation statement/prospectus are cautioned not to place undue reliance on the prospective financial information.

Neither Innoviz’s independent auditors, nor any other independent accountants, have complied, examined or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information. The audit reports included in this proxy statement/consent solicitation statement/prospectus relate to historical financial information. They do not extend to the prospective financial information and should not be read to do so.

EXCEPT AS REQUIRED BY APPLICABLE SECURITIES LAWS, INNOVIZ DOES NOT INTEND TO MAKE PUBLICLY AVAILABLE ANY UPDATE OR OTHER REVISION TO THE PROSPECTIVE FINANCIAL INFORMATION. THE PROSPECTIVE FINANCIAL INFORMATION DOES NOT TAKE INTO ACCOUNT ANY CIRCUMSTANCES OR EVENTS OCCURRING AFTER THE DATE THAT THE INFORMATION WAS PREPARED. READERS OF THIS PROXY STATEMENT/PROSPECTUS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION SET FORTH BELOW. NONE OF INNOVIZ, COLLECTIVE GROWTH NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, ADVISORS OR OTHER REPRESENTATIVES HAS MADE OR MAKES ANY REPRESENTATION TO ANY INNOVIZ SHAREHOLDER, COLLECTIVE GROWTH STOCKHOLDER OR ANY OTHER PERSON REGARDING ULTIMATE PERFORMANCE COMPARED TO THE INFORMATION CONTAINED IN THE PROSPECTIVE FINANCIAL INFORMATION OR THAT FINANCIAL AND OPERATING RESULTS WILL BE ACHIEVED.

Certain of the measures included in the prospective financial information may be considered non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Innoviz may not be comparable to similarly titled amounts used by other companies. Financial measures provided to a financial advisor in connection with a business combination transaction are excluded from the definition of non-GAAP financial measures and therefore are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Accordingly, we have not provided a reconciliation of such financial measures.

 

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The following table sets forth certain summarized prospective financial information regarding Innoviz for the years 2020, 2021, 2022, 2023, 2024 and 2025:

 

     Forecast Year Ended December 31,  
(USD in millions)        2020E             2021E             2022E             2023E                 2024E         2025E      

Revenue

   $ 5     $ 9     $ 23     $ 79     $ 237     $ 581  

Gross Profit

   $      *   $ 1     $ 6     $ 35     $ 118     $ 300  

Adjusted EBIT(1)

   $ (68   $ (89   $ (89   $ (67   $ 4     $ 168  

Free Cash Flow(2)

   $ (69   $ (90   $ (93   $ (82   $ (38   $ 75  

 

*)

Represents an amount lower than $1 million.

(1)

Adjusted EBIT is defined as EBIT adjusted for stock-based compensation. We caution investors that amounts presented in accordance with our definition of Adjusted EBIT may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate Adjusted EBIT in the same manner. Adjusted EBIT should not be considered as an alternative to net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.

(2)

Free Cash Flow is defined as Adjusted EBITDA less maintenance capital expenditures, interest expense pertaining to long term debt, amortization of deferred transaction costs and premium on long term debt, current taxes paid and mandatory debt principal repayments. Free Cash Flow is a non-GAAP financial measure and should not be considered as an alternative to net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.

The Innoviz prospective financial information was prepared using several assumptions, including the following assumptions that Innoviz management believed to be material:

 

   

projected revenue is based on a variety of operational assumptions, including among others continued development of autonomous vehicle platforms by the auto industry and other market segments, commercialization timing for new products under development, growth in the number of units sold and product mix, the average selling price per system and resulting sales of systems;

 

   

projected gross profit is driven by a multitude of factors attributed among others to manufacturing efficiencies through volume, cost reductions of components, relaying on business partners (such as Tier-1) for high volume production, new technologies and product design and the growth in higher margin mix of products contribution. Reduction in costs associated with manufacturing overhead, warranty and logistics are taken into consideration as well and are supporting the projected gross profits; and

 

   

other key assumptions impacting profitability projections including headcount, third party contractors, engineering consulting and prototyping spend, but excluding costs associated with public company operations and compliance.

In making the foregoing assumptions, which imply a revenue compound annual growth rate of 162% between 2020 and 2025, Innoviz management relied on a number of factors, including:

 

   

its estimates of market maturity over the projected period;

 

   

its best estimates of the timing for new product releases and overall product development process;

 

   

the relevant uses of Innoviz products for different applications and market segments;

 

   

the historical system usage patterns of Innoviz customers;

 

   

third party forecasts for industry growth

In addition, the foregoing assumptions regarding gross profit and Adjusted EBIT are based on Innoviz management’s plan for continued use of resellers and third-party contract manufacturers.

 

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Satisfaction of 80% Test

It is a requirement under the SPAC Charter that any business acquired by Collective Growth have a fair market value equal to at least 80% of the balance of the funds in the trust account (excluding the deferred underwriting commissions and taxes payable) at the time of the execution of a definitive agreement for an initial business combination. The balance of the funds in the trust account (excluding deferred underwriting commissions and taxes payable) at the time of the execution of the Business Combination Agreement with Innoviz was approximately $150,000,000 and 80% thereof represents approximately $120,000,000. In determining whether the 80% requirement was met, rather than relying on any one factor, Collective Growth’s board of directors concluded that it was appropriate to base such valuation on a number of qualitative factors, such as management strength and depth, competitive positioning, customer relationships and technical skills, as well as quantitative factors, such as the anticipated implied equity value of the combined company being approximately $975,000,000 with no material debt expected to be outstanding, Collective Growth’s assessment that Innoviz’s valuation was attractive compared to its competitive peers, the historical performance of Innoviz and the potential for future growth in revenues and profits of Innoviz. Based on the qualitative and quantitative information used to approve the Business Combination described herein, Collective Growth’s board of directors determined that the foregoing 80% fair market value requirement was met. Collective Growth’s board of directors believes that the financial skills and background of its members qualify it to conclude that the acquisition met the 80% requirement.

Interests of Certain Persons in the Business Combination

In considering the recommendation of Collective Growth’s board of directors to vote in favor of approval of the business combination proposal and the charter proposals stockholders should keep in mind that the Sponsor and Collective Growth’s directors and executive officers have interests in such proposals that are different from, or in addition to, those of Collective Growth’s stockholders generally. In particular:

 

   

If the Business Combination with Innoviz or another business combination is not consummated by November 5, 2021 (or such later date as may be approved by Collective Growth’s stockholders), Collective Growth will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, the 3,750,000 sponsor shares held by the Sponsor and Collective Growth’s directors and officers, which were acquired for an aggregate purchase price of $25,000 prior to the Collective Growth IPO, would be worthless because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of approximately $42.0 million based upon the closing price of $11.20 per share on Nasdaq on March 4, 2021, the record date. On the other hand, if the Business Combination is consummated, each outstanding share of Collective Growth Common Stock (other than the shares forfeited pursuant to the Forfeiture Agreement) will be converted into Innoviz ordinary shares at the Exchange Ratio.

 

   

The Sponsor purchased 1,875,000 private warrants from Collective Growth for $1.00 per private warrant and the Sponsor and certain of Collective Growth’s directors and officers purchased 262,500 private units from Collective Growth for $10.00 per private unit. These purchases took place on a private placement basis simultaneously with the consummation of the Collective Growth IPO. All of the proceeds Collective Growth received from these purchases were placed in the trust account. Such private warrants (including the warrants included in the private units) had an aggregate market value of approximately $5.7 million based upon the closing price of $2.66 per warrant on Nasdaq on March 4, 2021 and the Class A Stock underlying the private units had an aggregate market value of approximately $2.9 million based upon the closing price of $11.20 per share of Class A Stock on Nasdaq on March 4, 2021. The private warrants (including the warrants included in the private units) and the Class A Stock underlying the private units will become worthless if Collective Growth does not consummate a business combination by November 5, 2021 (or such later date as may be approved by

 

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Collective Growth stockholders in an amendment to). On the other hand, if the Business Combination is consummated, each outstanding whole warrant will become an Innoviz warrant exercisable to purchase one Innoviz ordinary share following consummation of the Business Combination and each outstanding share of Collective Growth Common Stock (other than the shares forfeited pursuant to the Forfeiture Agreement) will be converted into Innoviz ordinary shares at the Exchange Ratio.

 

   

If Collective Growth is unable to complete a business combination within the required time period, the Sponsor will be personally liable under certain circumstances described herein to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Collective Growth for services rendered or contracted for or products sold to Collective Growth. If Collective Growth consummates a business combination, on the other hand, Collective Growth will be liable for all such claims.

 

   

The Sponsor and Collective Growth’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Collective Growth’s behalf, such as identifying and investigating possible business targets and business combinations. However, if Collective Growth fails to consummate a business combination within the required period, they will not have any claim against the trust account for reimbursement. Accordingly, Collective Growth may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by November 5, 2021 (or such later date as may be approved by Collective Growth stockholders in an amendment to the SPAC Charter). As of the record date, the Sponsor and Collective Growth’s officers and directors and their affiliates had incurred approximately $252,000 of unpaid reimbursable expenses.

 

   

The Business Combination Agreement provides for the continued indemnification of Collective Growth’s current directors and officers and the continuation of directors and officers liability insurance covering Collective Growth’s current directors and officers.

 

   

Collective Growth’s officers and directors (or their affiliates) may make loans from time to time to Collective Growth to fund certain capital requirements. As of the date of this proxy statement/prospectus, no such loans have been made, but loans may be made after the date of this proxy statement/prospectus. If the Business Combination is not consummated, the loans will not be repaid and will be forgiven except to the extent there are funds available to Collective Growth outside of the trust account.

Anticipated Accounting Treatment

The Transaction is comprised of a series of transactions pursuant to the Business Combination Agreement, as described elsewhere in this proxy statement/prospectus. For accounting purposes, the Transaction effectuated three main steps:

 

  1.

The exchange of shares held by Innoviz shareholders, which is accounted for as a recapitalization in accordance with US GAAP.

 

  2.

The merger of Collective Growth with Merger Sub, which is not within the scope of ASC 805 (“Business Combinations”) since Collective Growth does not meet the definition of a business in accordance with ASC 805. Any difference between the fair value of Innoviz ordinary shares issued and the fair value of Collective Growth’s identifiable net assets should to be recorded as additional paid-in capital. For purposes of the unaudited pro forma condensed combined financial information, it is assumed that the fair value of each individual Innoviz ordinary share issued to Collective Growth stockholders is equal to the fair value of each individual Innoviz shareholder resulting from the $975.0 million equity value assigned to Innoviz in the Business Combination Agreement.

 

  3.

The Subscription Agreements related to the PIPE, which were executed concurrently with and following the Business Combination Agreement, will result in the issuance of Innoviz ordinary shares, leading to an increase in share capital and share premium.

 

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Regulatory Matters

The Business Combination is not subject to any federal or state regulatory requirement or approval, except for the filing of required notifications and the expiration or termination of the required waiting periods under the HSR Act and filings with the State of Delaware necessary to effectuate the Business Combination.

Vote Required for Approval

The approval of the business combination proposal will require the affirmative vote of the holders of a majority of the then outstanding shares of Collective Growth Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” the business combination proposal. Brokers are not entitled to vote on the business combination proposal absent voting instructions from the beneficial holder and, consequently, broker non-votes will have no effect on the business combination proposal. The Transactions will not be consummated if Collective Growth has less than $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act) either immediately prior to or upon consummation of the Transactions.

The approval of the business combination proposal is a condition to the consummation of the Transactions. If the business combination proposal is not approved, the other proposals (except an adjournment proposal, as described below) will not be presented to the Collective Growth stockholders for a vote.

Resolution

RESOLVED, as an ordinary resolution, that Collective Growth’s entry into the Business Combination Agreement, dated as of December 10, 2020 (the “Business Combination Agreement”), by and among Collective Growth, Innoviz, Hatzata Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Innoviz (“Merger Sub”), Perception Capital Partners LLC, a Delaware limited liability company (“Perception”) (solely for purposes of Sections 2.2(d), 2.3(a), 2.8, 2.9, 5.2, 5.5, 7.2 and Article VIII) and Antara Capital LP, a Delaware limited partnership and investment manager acting on behalf of certain of its funds and/or designees (“Antara Capital”) (solely for purposes of Sections 5.2, 5.5, 7.2 and Article VIII), a copy of which is attached to this proxy statement/prospectus as Annex A, pursuant to which, among other things, the merger of Merger Sub with and into Collective Growth, with Collective Growth surviving the merger as a wholly owned subsidiary of Innoviz, in accordance with the terms and subject to the conditions of the Business Combination Agreement, be approved, ratified and confirmed in all respects.”

Recommendation of Collective Growth Board of Directors

THE COLLECTIVE GROWTH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COLLECTIVE GROWTH STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE BUSINESS COMBINATION PROPOSAL.

No Appraisal Rights

Under Section 262 of the General Corporation Law of the State of Delaware, the holders of Collective Growth Common Stock will not have appraisal rights in connection with the Business Combination.

Resale of Innoviz Ordinary Shares

The Innoviz ordinary shares to be issued in connection with the Business Combination will be freely transferable under the Securities Act except for shares issued to any shareholder who may be deemed for purposes of Rule 144 under the Securities Act an “affiliate” of Collective Growth immediately prior to the Effective Time or an “affiliate” of Innoviz following the Business Combination. Persons who may be deemed to be affiliates include individuals or entities that control, are controlled by, or are under common control with, Innoviz or Collective Growth (as appropriate) and may include the executive officers, directors and significant shareholders of Innoviz or Collective Growth (as appropriate).

 

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Stock Exchange Listing of Innoviz Ordinary Shares

Innoviz will use commercially reasonable efforts to cause, prior to the Effective Time, the Innoviz ordinary shares and warrants (including Innoviz ordinary shares and warrants issuable pursuant to the Business Combination Agreement) to be approved for listing on Nasdaq under the symbols “INVZ” and “INVZW,” respectively, subject to official notice of issuance. Approval of the listing on Nasdaq of the Innoviz ordinary shares (subject to official notice of issuance) is a condition to each party’s obligation to complete the Business Combination.

Delisting and Deregistration of Collective Growth Common Stock

If the Business Combination is completed, shares of Class A Stock, Collective Growth warrants and Collective Growth’s units will be delisted from Nasdaq and will be deregistered under the Exchange Act.

Combined Company Status as a Foreign Private Issuer under the Exchange Act

Innoviz expects to remain a “foreign private issuer” (under SEC rules). Consequently, upon consummation of the Business Combination, the combined company will be subject to the reporting requirements under the Exchange Act applicable to foreign private issuers. The combined company will be required to file its annual report on Form 20-F for the year ending December 31, 2020 with the SEC by April 30, 2021. In addition, the combined company will furnish reports on Form 6-K to the SEC regarding certain information that is distributed or required to be distributed by the combined company to its shareholders.

Based on its foreign private issuer status, the combined company will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as a U.S. company whose securities are registered under the Exchange Act. The combined company will also not be required to comply with Regulation FD, which addresses certain restrictions on the selective disclosure of material information. In addition, among other matters, the combined company officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of the Innoviz ordinary shares.

Given the substantial number of Innoviz ordinary shares that Innoviz will issue in the Business Combination to Collective Growth stockholders who are U.S. residents and the prospective, increased U.S.-oriented profile of the combined company’s officers and directors, assets and business administration, it is possible that the combined company will lose its status as a foreign private issuer after the Business Combination, potentially as soon as January 1, 2022. If that happens the combined company will no longer be exempt from such rules and, among other things, will be required to file quarterly reports on Form 10-Q containing interim financial statements as if it were a company incorporated in the United States, as well as annual reports on Form 10-K. The combined company’s qualification for foreign private issuer status will be tested again as of June 30, 2021, (the final business day of the second fiscal quarter in 2021) to determine whether the combined company will instead be subject to the reporting requirements applicable to U.S. companies registered under the Exchange Act beginning at the start of 2022. If it no longer meets the definition of a “foreign private issuer” as of that test date, the combined company will begin to be required to file a quarterly report on Form 10-Q for the quarter ending March 31, 2022, and will be required to continue to file quarterly reports with the SEC thereafter.

Despite its initial exemption due to its foreign private issuer status, Innoviz, and following the consummation of the Business Combination, the combined company, nevertheless expects to issue interim quarterly financial information publicly and to furnish it to the SEC on Form 6-K.

Combined Company Status as an Emerging Growth Company under U.S. Federal Securities Laws and Related Implications

Each of Collective Growth and Innoviz is, and consequently, following the Business Combination, the combined company will be, an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as

 

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modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, the combined company will be eligible to 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 of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in their 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. If some investors find the combined company’s securities less attractive as a result, there may be a less active trading market for the combined company’s securities and the prices of the combined company’s 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. The combined company 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, the combined company, 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 the combined company’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

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

 

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PROPOSAL TWO—THE CHARTER PROPOSALS

The charter proposals, if approved, will approve the following material differences between the SPAC Charter and Innoviz Articles to be in effect following the Business Combination:

 

   

the name of the new public entity will be “Innoviz Technologies Ltd.” as opposed to “Collective Growth Corporation”;

 

   

the Innoviz Articles provide for one class of ordinary shares as opposed to the two classes of Collective Growth Common Stock provided for in the SPAC Charter;

 

   

Innoviz’s corporate existence is perpetual as opposed to Collective Growth’s corporate existence terminating if a business combination is not consummated within a specified period of time; and

 

   

the Innoviz Articles do not include the various provisions applicable only to special purpose acquisition corporations that the SPAC Charter contains.

In the judgment of Collective Growth’s board of directors, the charter proposals are desirable for the following reasons:

 

   

the name of the new public entity is desirable to reflect the Business Combination and the combined business going forward;

 

   

the single class of ordinary shares is desirable because all shares of Class B Stock will be exchanged for Innoviz ordinary shares upon the closing of the Business Combination and because it will allow Innoviz to have a streamlined capital structure; and

 

   

the provisions that relate to the operation of Collective Growth as a blank check company prior to the consummation of its initial business combination would not be applicable after the business combination (such as the obligation to dissolve and liquidate if a business combination is not consummated in a certain period of time.

For a comparison of the SPAC Charter and Innoviz Articles, see “Comparison of Rights of Innoviz Shareholders and Collective Growth Stockholders”.

Under the Business Combination Agreement, the approval of the charter proposals is a condition to the adoption of the business combination proposal and vice versa. Accordingly, if the business combination proposal is not approved, the charter proposals will not be presented at the special meeting.

A copy of the Innoviz Articles, as will be in effect assuming approval of all of the charter proposals and upon consummation of the Transactions, is attached to this proxy statement/prospectus as Annex B.

Required Vote

The approval of each of the charter proposals will require the affirmative vote of the holders of a majority of the Collective Growth Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” the charter proposals. The charter proposal to approve “Innoviz Technologies Ltd.” as the name of the new public entity is a routine proposal and, accordingly, your broker, bank or nominee may vote your shares with respect to such proposal without receiving voting instructions. Consequently, there should be no broker non-votes with respect to such proposal. Each other charter proposal is considered a non-routine proposal, and, accordingly, brokers are not entitled to vote on those proposals without receiving voting instructions, and broker non-votes will have no effect with respect to such proposals.

Recommendation

THE COLLECTIVE GROWTH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT COLLECTIVE GROWTH STOCKHOLDERS VOTE “FOR” THE APPROVAL OF EACH OF THE CHARTER PROPOSALS.

 

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PROPOSAL THREE—THE ADJOURNMENT PROPOSAL

The adjournment proposal, if adopted, will allow Collective Growth’s board of directors to adjourn the special meeting to a later date or dates, if necessary. In no event will Collective Growth solicit proxies to adjourn the special meeting or consummate the Transactions beyond the date by which it may properly do so under the SPAC Charter and Delaware law. The purpose of the adjournment proposal is to provide more time to meet the requirements that are necessary to consummate the Transactions. See the sections titled “Proposal One – The Business Combination Proposal —Interests of Certain Persons in the Transactions” and “Proposal Two—The Charter Proposals.”

Consequences If the Adjournment Proposal Is Not Approved

If the adjournment proposal is presented to the meeting and is not approved by the stockholders, Collective Growth’s board of directors may not be able to adjourn the special meeting to a later date or dates if necessary to provide additional time to allow the parties to consummate the Transactions. In such event, the Transactions may not be completed.

Required Vote

The approval of the adjournment proposal will require the affirmative vote of the holders of a majority of the shares of Collective Growth Common Stock present and entitled to vote at the special meeting. Abstentions will have the same effect as a vote “against” the adjournment proposal. Brokers are entitled to vote on the adjournment proposal absent voting instructions from the beneficial holder because the proposal is considered “routine”. Consequently, there should be no broker non-votes with respect to the adjournment proposal.

Recommendation

THE COLLECTIVE GROWTH BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT COLLECTIVE GROWTH STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.

 

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THE BUSINESS COMBINATION AGREEMENT

For a discussion of the Business Combination structure and merger consideration provisions of the Business Combination Agreement, see the section entitled “Proposal One – The Business Combination Agreement Proposal.” Such discussion and the following summary of other material provisions of the Business Combination Agreement is qualified by reference to the complete text of the Business Combination Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. All Collective Growth stockholders are encouraged to read the Business Combination Agreement in its entirety for a more complete description of the terms and conditions of the Business Combination.

The Business Combination Agreement summary below is included in this proxy statement/prospectus only to provide you with information regarding the terms and conditions of the Business Combination Agreement and not to provide any other factual information regarding Collective Growth, Innoviz or their respective businesses. Accordingly, the representations and warranties and other provisions of the Business Combination Agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this proxy statement/prospectus.

Closing and Effective Time of the Transactions

The closing of the Transactions will take place as promptly as reasonably practicable, but in no event later than the third business day following the satisfaction of the conditions set forth in the Business Combination Agreement (the “Closing Date”) and summarized below under the subsection entitled “—Conditions to Closing of the Transactions,” unless Collective Growth and Innoviz agree in writing to another time or unless the Business Combination Agreement is terminated pursuant to its terms. The Transactions are expected to be consummated promptly after the special meeting of Collective Growth’s stockholders described in this proxy statement/prospectus.

Representations and Warranties

The Business Combination Agreement contains representations and warranties of Collective Growth relating, among other things, to:

 

   

corporate organization and qualification;

 

   

the authorization, delivery and enforceability of the Business Combination Agreement and the Ancillary Documents;

 

   

governmental approvals and no conflicts;

 

   

brokers’ fees;

 

   

information supplied;

 

   

capitalization;

 

   

SEC filings;

 

   

Trust Account;

 

   

indebtedness;

 

   

transactions with affiliates;

 

   

litigation and proceedings;

 

   

compliance with laws;

 

   

business activities;

 

   

internal controls;

 

   

Nasdaq listing;

 

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financial statements;

 

   

internal controls;

 

   

absence of undisclosed liabilities;

 

   

taxes;

 

   

material contracts;

 

   

absence of certain changes;

 

   

employee benefits;

 

   

Sponsor Letter Agreement;

 

   

Investment Company Act;

 

   

charter provisions;

 

   

anti-corruption compliance;

 

   

Forfeiture Agreement;

 

   

non-Israeli residency; and

 

   

independent investigation and absence of outside reliance.

The Business Combination Agreement contains representations and warranties of Innoviz relating, among other things, to:

 

   

organization and qualification;

 

   

capitalization;

 

   

the authorization, delivery and enforceability of the Business Combination Agreement and the Ancillary Documents;

 

   

financial statements;

 

   

internal controls;

 

   

absence of undisclosed liabilities;

 

   

governmental approvals and no conflicts;

 

   

permits;

 

   

material contracts;

 

   

absence of certain changes;

 

   

litigation and proceedings;

 

   

compliance with laws;

 

   

employee benefits;

 

   

environmental matters;

 

   

intellectual property;

 

   

labor matters;

 

   

insurance;

 

   

taxes;

 

   

brokers’ fees;

 

   

real and personal property;

 

   

transactions with affiliates;

 

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anti-corruption compliance;

 

   

customers and suppliers;

 

   

product warranties and product liabilities;

 

   

PIPE financing;

 

   

information supplied; and

 

   

independent investigation and absence of outside reliance.

Covenants

The parties have each agreed to use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or advisable to consummate and make effective as promptly as reasonably practicable the transactions contemplated by the Business Combination Agreement. Collective Growth and Innoviz have each also agreed to use commercially reasonable efforts to conduct and operate their respective businesses in the ordinary course and in compliance with all applicable laws through the earlier of the closing of the Transactions or the valid termination of the Business Combination Agreement pursuant to its terms.

Collective Growth and Innoviz have agreed that, unless otherwise required or permitted under the Business Combination Agreement, and subject to certain disclosed exceptions, neither Innoviz nor its subsidiaries will take the following actions during the interim period from the date of the Business Combination Agreement through the earlier of the closing of the Transactions or the valid termination of the Business Combination Agreement pursuant to its terms, among others, except as consented to in writing by Collective Growth (such consent, not to be unreasonably withheld, conditioned or delayed):

 

   

declare, set aside, make or pay a dividend on, or make any other distribution or payment (whether in cash, stock or property) in respect of, any equity securities of Innoviz or its subsidiaries or repurchase, redeem or otherwise acquire, offer to repurchase, redeem or otherwise acquire, any outstanding equity securities of Innoviz or its subsidiaries, other than dividends or distributions, declared, set aside or paid by any of Innoviz’s subsidiaries to Innoviz or any subsidiary that is, directly or indirectly, wholly owned by Innoviz, and other than any dividends or distributions required under the governing documents of any joint venture of any subsidiaries of Innoviz;

 

   

(A) merge, consolidate, combine or amalgamate Innoviz or any of its subsidiaries with any person or (B) purchase or otherwise acquire (whether by merging or consolidating with, purchasing any equity security in or a substantial portion of the assets of, or by any other manner) any corporation, partnership, association or other business entity or organization or division thereof, other than such acquisitions and purchases that would not require financial statements of the acquired business to be included in this proxy statement/prospectus pursuant to Rule 3-05 of Regulation S-X under the Securities Act;

 

   

adopt any amendments, supplements, restatements or modifications to Innoviz’s or any of its subsidiaries’ governing documents;

 

   

form or establish any subsidiary other than in the ordinary course of business;

 

   

transfer, issue, sell, grant or otherwise directly or indirectly dispose of, or subject to a lien, (A) any equity securities of Innoviz or any of its subsidiaries or (B) any options, warrants, rights of conversion or other rights, agreements, arrangements or commitments obligating Innoviz or any of its subsidiaries to issue, deliver or sell any equity securities of Innoviz or any of its subsidiaries, other than (X) the issuance of Company Equity Awards pursuant to a Company Equity Plan or the issuance of shares of capital stock of Innoviz upon the exercise, settlement or conversion of any Company Equity Awards outstanding on the date of the Business Combination Agreement in accordance with the terms of the applicable Company Equity Plan and the underlying grant, award or similar agreement, (Y) the

 

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issuance by Innoviz of certain Series C-1 Preferred Shares , or (Z) the issuance by Innoviz of certain performance warrants;

 

   

incur, create or assume any indebtedness in excess of $10,000,000, other than (x) ordinary course trade payables, (y) between Innoviz and any of its wholly owned subsidiaries or between any of such wholly owned subsidiaries or (z) in connection with borrowings, extensions of credit and other financial accommodations under Innoviz’s and its subsidiaries’ existing credit facilities, notes and other existing indebtedness and, in each case, any refinancings thereof;

 

   

make any loans, advances or capital contributions to, or guarantees for the benefit of, or any investments in, any person, other than (A) intercompany loans or capital contributions between Innoviz and any of its wholly owned subsidiaries, (B) the reimbursement of expenses of employees in the ordinary course of business, (C) advances in the ordinary course of business to employees or officers of Innoviz or its subsidiaries not exceeding $500,000 in the aggregate, (D) prepayments and deposits paid to suppliers of Innoviz or its subsidiaries in the ordinary course of business, (E) trade credit extended to customers of Innoviz or its subsidiaries in the ordinary course of business and (F) advances to wholly owned subsidiaries of Innoviz;

 

   

except (x) as required under the terms of any Employee Benefit Plan of Innoviz or its subsidiaries or any applicable law, or (y) in the ordinary course of business, (A) amend, modify, adopt, enter into or terminate any material employee benefit plan of Innoviz or its subsidiaries or any material benefit or compensation plan, policy, program or contract that would be an employee benefit plan if in effect as of the date of the Business Combination Agreement, (B) materially increase the compensation or benefits payable to, or pay any material special bonus or special remuneration to, any current or former director, manager, officer, employee, individual independent contractor or other service provider of Innoviz or its subsidiaries, (C) take any action to accelerate any payment, right to payment, or benefit, or the funding of any payment, right to payment or benefit, payable or to become payable to, or the vesting or period of exercisability of an equity award held by, or reprice an equity award held by, any current or former director, manager, officer, employee, individual independent contractor or other service provider of Innoviz or its subsidiaries, (D) waive or release any noncompetition, non-solicitation, no-hire, nondisclosure or other restrictive covenant obligation of any current or former director, manager, officer, employee, individual independent contractor or other service provider of Innoviz or its subsidiaries, (E) enter into any collective bargaining agreement or arrangement, (F) hire new executive officers, or (G) terminate the employment or engagement of any executive officer other than for cause;

 

   

make, change or revoke any election concerning taxes (including, for the avoidance of doubt, making any U.S. federal income tax entity classification election pursuant to Treasury Regulations Section 301.7701-3(c) with respect to Innoviz or its subsidiaries not contemplated by the Business Combination Agreement), enter into any tax closing agreement, settle any tax claim or assessment, change its jurisdiction of tax residence, or consent to any extension or waiver of the limitation period applicable to or relating to any tax claim or assessment, in each case, if such action would be reasonably expected to materially increase the present or future tax liability of Collective Growth or Innoviz or its subsidiaries;

 

   

enter into any settlement, conciliation or similar contract outside of the ordinary course of business the performance of which would involve the payment by Innoviz or its subsidiaries in excess of $2,000,000, in the aggregate, or that imposes, or by its terms will impose at any point in the future, any material, non-monetary obligations on any Innoviz or its subsidiaries (or Collective Growth or any of its affiliates after the closing of the Transactions);

 

   

authorize, recommend, propose or announce an intention to adopt, or otherwise effect, a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, reorganization or similar transaction involving Innoviz or its subsidiaries;

 

   

change Innoviz’s or its subsidiaries’ methods of accounting in any material respect, other than changes that are made in accordance with PCAOB standards;

 

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enter into any contract with any broker, finder, investment banker or other person under which such person is or will be entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Business Combination Agreement;

 

   

except for entries, modifications, amendments, waivers, terminations or non-renewals in the ordinary course of business, enter into, materially modify, materially amend, waive any material right under, terminate (excluding any expiration in accordance with its terms) or fail to renew, any material contract (excluding, for the avoidance of doubt, any expiration or automatic extension or renewal of any such material contract pursuant to its terms);

 

   

abandon, dispose of, allow to lapse, transfer, sell, assign, or exclusively license any material intellectual property of Innoviz to any person or entity or otherwise extend, amend, or modify any material intellectual property of Innoviz (other than development in the ordinary course of business);

 

   

sell, lease, license, encumber or otherwise dispose of any properties or assets except for the sale, lease, license, or disposition in the ordinary course of business;

 

   

close any facility or discontinue any material line of business or material business operations; or

 

   

enter into any contract to take, or cause to be taken, any of the foregoing actions.

Collective Growth and Innoviz have agreed that, unless otherwise required or permitted under the Business Combination Agreement, and subject to certain disclosed exceptions, Collective Growth will not take the following actions during the interim period from the date of the Business Combination Agreement through the earlier of the closing of the Transactions or the valid termination of the Business Combination Agreement pursuant to its terms, among others, except as consented to in writing by Innoviz (such consent not to be unreasonably withheld, conditioned or delayed):

 

   

adopt any amendments, supplements, restatements or modifications to the Existing Warrant Agreement, the investment management trust agreement dated as of April 30, 2020 between Collective Growth and Continental or the governing documents of Collective Growth;

 

   

declare, set aside, make or pay a dividend on, or make any other distribution or payment (where in cash, stock or property) in respect of, any equity securities of Collective Growth or repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any outstanding equity securities of Collective Growth;

 

   

(A) merge, consolidate, combine or amalgamate Collective Growth with any person or (B) purchase or otherwise acquire (whether by merging or consolidating with, purchasing any equity security in or a substantial portion of the assets of, or by any other manner) any corporation, partnership, association or other business entity or organization or division thereof;

 

   

split, combine or reclassify any of its capital stock or other equity securities or issue any other security in respect of, in lieu of or in substitution for shares of its capital stock;

 

   

incur, create, assume, refinance, guarantee or otherwise become liable for (whether directly, contingently, or otherwise) any indebtedness or other liability, except for the Unpaid SPAC Expenses (as defined in the Business Combination Agreement);

 

   

make any loans or advances to, or capital contributions to, or guarantees for the benefit of, or any investment in, any other person, other than to, of, or in, Collective Growth;

 

   

issue any equity securities of Collective Growth or grant any additional options, warrants or stock appreciation rights with respect to equity securities of the foregoing of Collective Growth;

 

   

enter into, renew, modify or revise any Collective Growth related-party transaction (or any contract or agreement that if entered into prior to the execution and delivery of the Business Combination Agreement would be a Collective Growth related-party transaction) other than with respect to Unpaid SPAC Expenses;

 

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engage in any activities or business, other than activities or business (i) in connection with or incident or related to Collective Growth’s incorporation or continuing corporate (or similar) existence, (ii) contemplated by, or incident or related to, the Business Combination Agreement, any Ancillary Document, the performance of covenants or agreements thereunder or the consummation of the Transactions or (iii) those that are administrative or ministerial, in each case, which are immaterial in nature

 

   

make, change or revoke any election concerning taxes (including, for the avoidance of doubt, making any U.S. federal income tax entity classification election pursuant to Treasury Regulations Section 301.7701-3(c) with respect to Collective Growth not contemplated by the Business Combination Agreement), enter into any tax closing agreement, settle any tax claim or assessment, change its jurisdiction of tax residence, or consent to any extension or waiver of the limitation period applicable to or relating to any tax claim or assessment, in each case, if such action would reasonably be expected to materially increase the present or future tax liability of Collective Growth or Innoviz or any its subsidiaries;

 

   

enter into any settlement, conciliation or similar contract that would require any payment from the Trust Account or that would impose any material non-monetary obligations on Collective Growth (or Innoviz or any of its subsidiaries after the closing of the Transactions);

 

   

authorize, recommend, propose or announce an intention to adopt, or otherwise effect, a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, reorganization or similar transaction involving Collective Growth;

 

   

change Collective Growth’s methods of accounting in any material respect, other than changes that are made in accordance with PCAOB standards;

 

   

enter into any contract with any broker, finder, investment banker or other person under which such person is or will be entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Business Combination Agreement;

 

   

except for entries, modifications, amendments, waivers, terminations or non-renewals in the ordinary course of business, enter into, materially modify, materially amend, waive any material right under, terminate (excluding any expiration in accordance with its terms) or fail to renew, any material contract (excluding, for the avoidance of doubt, any expiration or automatic extension or renewal of any such material contract pursuant to its terms);

 

   

enter into or adopt any Collective Growth benefit plan or any benefit or compensation plan, policy, program or arrangement that would be a Collective Growth benefit plan if in effect as of the date of the Business Combination Agreement; or

 

   

enter into any contract to take, or cause to be taken, any of the foregoing actions.

The Business Combination Agreement also contains additional covenants of the parties, including, among other things:

 

   

notifying the other party in writing promptly after learning of any shareholder demands or other shareholder proceedings relating to the Business Combination Agreement, any Ancillary Document or any matters relating thereto and reasonably cooperate with one another in connection therewith;

 

   

keeping certain information confidential in accordance with the existing non-disclosure agreements; and

 

   

making relevant public announcements.

In addition, Collective Growth and Innoviz agreed that Collective Growth and Innoviz will prepare and mutually agree upon and Innoviz will file with the SEC, this registration statement/proxy statement on Form F-4 relating to the Business Combination.

 

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Conditions to Closing of the Transactions

Conditions to Each Party’s Obligations

 

   

The respective obligations of each party to the Business Combination Agreement to consummate the transactions contemplated by the Business Combination are subject to the satisfaction or waiver, if permitted by applicable law, by the party for whose benefit such condition exists, of the following conditions:

 

   

the applicable waiting periods (and any extensions thereof) under the HSR Act relating to the Business Combination having been expired or been terminated;

 

   

there shall not have been entered, enacted or promulgated any law or order enjoining or prohibiting the consummation of the Transactions;

 

   

this registration statement/proxy statement becoming effective in accordance with the provisions of the Securities Act, no stop order suspending the effectiveness of this proxy statement/prospectus being issued by the SEC and remaining in effect with respect to this proxy statement/prospectus, and no proceeding seeking such a stop order being threatened or initiated by the SEC and remaining pending;

 

   

the receipt of the required approval by the preferred shareholders of Innoviz (the “Company Preferred Shareholder Approval”) and the required approval by the ordinary shareholders of Innoviz (the “Company Shareholder Approval”);

 

   

the approval of the Business Combination by the affirmative vote of the holders of the requisite number of Collective Growth Common Stock being obtained in accordance with Collective Growth’s governing documents and applicable law;

 

   

after giving effect to the transactions contemplated by the Business Combination Agreement (including the PIPE), Collective Growth having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) either immediately prior to or upon consummation of the Business Combination ;

 

   

no proceeding pending or threatened that is reasonably likely to (i) prevent consummation of any of the Transactions or (ii) cause any of the Transactions to be rescinded following consummation;

 

   

Innoviz’s initial listing application with Nasdaq in connection with the Transactions having been approved and Innoviz not having received any notice of non-compliance therewith that has not been cured and Innoviz’s shares (including, for the avoidance of doubt, the Innoviz ordinary shares to be issued pursuant to the Business Combination) having been approved for listing on Nasdaq, subject only to official notice of issuance thereof and the requirement to have a sufficient number of round lot holders; and

 

   

each Ancillary Document (other than the Subscription Agreements) having been executed and delivered by the parties thereto and being in full force and effect.

Other Conditions to the Obligations of Collective Growth

The obligations of Collective Growth to consummate the transactions contemplated by the Business Combination Agreement are subject to the satisfaction or, if permitted by applicable law, waiver by Collective Growth of the following further conditions:

 

   

certain representations and warranties of Innoviz regarding the organization of Innoviz and its subsidiaries, the capitalization of Innoviz’s subsidiaries, the authority of Innoviz to, among other things, execute and deliver the Business Combination Agreement and each of the Ancillary Documents to which it is or will be a party and to consummate the transactions contemplated thereby, the absence of certain changes and brokers’ fees being true and correct (without giving effect to any limitation of “materiality” or “Innoviz Material Adverse Effect” or any similar limitation set forth in the Business Combination Agreement) in all material respects as of the Closing Date as if made at and as of such date (or, if given as of an earlier date, as of such earlier date);

 

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certain other representations and warranties regarding the capitalization of Innoviz being true and correct in all respects (except for de minimis inaccuracies) as of the Closing Date (or, if given as of an earlier date, as of such earlier date);

 

   

the other representations and warranties of Innoviz being true and correct (without giving effect to any limitation as to “materiality” or “Innoviz Material Adverse Effect” or any similar limitation set forth in the Business Combination Agreement) in all respects as of the Closing Date (or, if given as of an earlier date, as of such earlier date), except where the failure of such representations and warranties to be true and correct, taken as a whole, does not cause a Innoviz Material Adverse Effect;

 

   

Innoviz having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by it under the Business Combination Agreement prior to the Closing;

 

   

since the date of the Business Combination Agreement, no Innoviz Material Adverse Effect has occurred that is continuing;

 

   

Collective Growth having received a certificate executed by an authorized officer of Innoviz confirming that the conditions set forth in the first five bullet points in this section have been satisfied;

 

   

Collective Growth having received a certificate executed by the secretary or equivalent officer of each of Innoviz and Merger Sub (together, the “Innoviz Parties”) certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors or equivalent body of each of the Innoviz Parties authorizing the execution, delivery, and performance of the Business Combination Agreement and the Transactions, and that all such resolutions are in full force and effect and are all of the resolutions adopted in connection with the Transactions;

 

   

the Innoviz board of directors consisting of the number of directors, and comprising the individuals, determined pursuant to the Business Combination Agreement; and

 

   

certain agreements between Innoviz and certain of its shareholders having been terminated.

Other Conditions to the Obligations of the Innoviz Parties

The obligations of the Innoviz Parties to consummate the transactions contemplated by the Business Combination Agreement are subject to the satisfaction or waiver, if permitted by applicable law, by the Innoviz Parties of the following further conditions:

 

   

certain representations and warranties regarding the organization and qualification of Collective Growth, the authority of Collective Growth to, among other things, execute and deliver the Business Combination Agreement and each of the Ancillary Documents to which it is or will be a party and to consummate the transactions contemplated thereby, brokers’ fees and the absence of certain changes being true and correct, in all material respects as of the Closing Date, as though made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date);

 

   

certain other representations and warranties regarding the capitalization of Collective Growth being true and correct in all respects, (except for de minimis inaccuracies) as of the Closing Date (or, if given as of an earlier date, as of such earlier date);

 

   

the other representations and warranties of Collective Growth being true and correct (without giving effect to any limitation of “materiality” or “material adverse effect” or any similar limitation set forth in the Business Combination Agreement) in all respects as of the Closing Date, except where the failure of such representations and warranties to be true and correct in all respects, taken as a whole, does not cause a material adverse effect;

 

   

Collective Growth having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by them under the Business Combination Agreement;

 

   

the Aggregate Transaction Proceeds being equal to or greater than $200,000,000;

 

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Innoviz having received resignations of all of the directors and officers of Collective Growth, effective as of or prior to the Closing;

 

   

Innoviz having received a certificate executed by the secretary or equivalent officer of Collective Growth certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Collective Growth authorizing the execution, delivery, and performance of the Business Combination Agreement and the Transactions, and that all such resolutions are in full force and effect and are all of the resolutions of the board of directors of Collective Growth adopted with the Transactions;

 

   

Innoviz having received a certificate executed by an authorized officer of Collective Growth confirming that the conditions set forth in the first four bullet points of this section have been satisfied;

 

   

the Unpaid SPAC Liabilities (as defined in the Business Combination Agreement) and Unpaid SPAC Expenses shall collectively not exceed $9.7 million; and

 

   

the Forfeiture shall have occurred and each of the other covenants of Sponsor required under the Forfeiture Agreement to be performed as of or prior to the Closing shall have been performed in all material respects.

Termination

The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including, among others, the following:

 

   

by the mutual written consent of Collective Growth and Innoviz;

 

   

by Collective Growth, subject to certain exceptions, if any of the representations or warranties made by either Innoviz Party are not true and correct or if either Innoviz Party fails to perform any of their respective covenants or agreements under the Business Combination Agreement (including an obligation to consummate the Closing) such that certain conditions to the obligations of Collective Growth as described in the section entitled “—Conditions to Closing of the Transactions” above could not be satisfied and the breach (or breaches) of such representations or warranties or failure (or failures) to perform such covenants or agreements is (or are) not cured or cannot be cured within the earlier of (i) thirty (30) days after written notice thereof, and (ii) May 30, 2021 (the “Termination Date”);

 

   

by Innoviz, subject to certain exceptions, if any of the representations or warranties made by Collective Growth are not true and correct or if Collective Growth fails to perform any of its covenants or agreements under the Business Combination Agreement (including an obligation to consummate the Closing) such that certain conditions to the obligations of Innoviz, as described in the section entitled “—Conditions to Closing of the Transactions” above could not be satisfied and the breach (or breaches) of such representations or warranties or failure (or failures) to perform such covenants or agreements is (or are) not cured or cannot be cured within the earlier of (i) thirty (30) days after written notice thereof, and (ii) the Termination Date;

 

   

by either Collective Growth or Innoviz if the transactions contemplated by the Business Combination Agreement are not consummated on or prior to the Termination Date, unless the breach of any covenants or obligations under the Business Combination Agreement by the party seeking to terminate proximately caused the failure to consummate the transactions contemplated by the Business Combination Agreement;

 

   

by either Collective Growth or Innoviz:

 

   

if any governmental entity shall have issued an order, promulgated a law or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by the Business Combination Agreement and such order or other action shall have become final and nonappealable; provided, however, that (i) the right to terminate the Business Combination

 

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Agreement pursuant to such provision shall not be available to Collective Growth if (A) Collective Growth’s failure to fulfill any obligation under the Business Combination Agreement has been the primary cause of, or primarily resulted in, the failure of the Closing to occur on or before such date or (B) Collective Growth is in material breach of its obligations under the Business Combination Agreement on such date and (ii) the right to terminate the Business Combination Agreement pursuant to such provision shall not be available to Innoviz if (A) an Innoviz Party’s failure to fulfill any obligation under the Business Combination Agreement has been the primary cause of, or primarily resulted in, the failure of the Closing to occur on before such date or (B) Innoviz is in material breach of its obligations under Business Combination Agreement on such date;

 

   

if the approval of the Business Combination is not obtained at the Collective Growth special meeting (including any adjournment thereof); or

 

   

if the approval of the Business Combination is not obtained by either the Innoviz ordinary shareholders or the Innoviz preferred shareholders at the Innoviz shareholder meeting (including any adjournment thereof);

 

   

by Collective Growth if, prior to obtaining the Company Preferred Shareholder Approval and the Company Shareholder Approval, the Innoviz board of directors shall have made a change in recommendation; and

 

   

by Innoviz if, prior to obtaining the required approval by the stockholders of Collective Growth (the “Collective Growth Stockholder Approval”), the Collective Growth board of directors shall have made a change in recommendation or shall have failed to include the Collective Growth board of director recommendation in this proxy statement/prospectus.

Fees and Expenses

The fees and expenses incurred in connection with the Business Combination Agreement and the Ancillary Documents, and the Transactions, including the fees and disbursements of counsel, financial advisors and accountants, will be paid by the party incurring such fees or expenses; provided that (i) if the Business Combination Agreement is terminated upon the Innoviz board of directors making a change in recommendation, Innoviz shall pay a termination fee in the amount of $14,625,000, (ii) if the Business Combination Agreement is terminated in accordance with its terms, Innoviz shall pay, or cause to be paid, all unpaid Innoviz expenses and Collective Growth shall pay, or cause to be paid, all unpaid Collective Growth expenses and (iii) if the Closing occurs, then Innoviz shall pay, or cause to be paid, all unpaid Innoviz expenses and all unpaid Collective Growth expenses.

Amendments

The Business Combination Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed by each of the parties thereto in the same manner as the Business Combination Agreement and which makes reference to the Business Combination Agreement.

Governing Law

The Business Combination Agreement, and all claims or causes of action based upon, arising out of, or related to the Business Combination Agreement or the Transactions, is governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware.

 

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AGREEMENTS ENTERED INTO IN CONNECTION WITH THE BUSINESS COMBINATION AGREEMENT

Subscription Agreements

Concurrently with and following the execution of the Business Combination Agreement, Innoviz entered into the Subscription Agreements, including the Put Share Subscription Agreement, with the PIPE Investors, pursuant to which the PIPE Investors have agreed to purchase, and Innoviz has agreed to sell the PIPE Investors, an aggregate of 23,000,000 Innoviz ordinary shares, for a purchase price of $10.00 per share and at an aggregate purchase price of $230,000,000. The obligations to consummate the transactions contemplated by the Subscription Agreements are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Business Combination Agreement.

Support Agreements

Concurrently with the execution of the Business Combination Agreement, Innoviz and Collective Growth entered into Support Agreements with the Supporting Innoviz Shareholders, that collectively hold Innoviz ordinary shares and Innoviz preferred shares, respectively, representing the majority of the voting power of the Innoviz ordinary shares and 60% of the voting power of the Innoviz preferred shares, including more than 50% of the Series C Preferred Shares and 50% of the Series C-1 Preferred Shares (voting together). Each Support Agreement provides, among other things, that each Supporting Innoviz Shareholder will (i) vote all Innoviz ordinary shares and Innoviz preferred shares beneficially owned by them in favor of the Business Combination and each other proposal related to the Business Combination on the agenda at the meeting of Innoviz shareholders called to approve the Business Combination, (ii) appear at such shareholder meeting for the purpose of establishing a quorum, (iii) vote all such shares against any action that would reasonably be expected to materially impede, interfere with, delay, postpone, or adversely affect the Business Combination or any of the other transactions contemplated by the Business Combination Agreement, and (iv) not to transfer, assign, or sell such shares, except to certain permitted transferees, prior to the consummation of the Business Combination.

Registration Rights Agreement

Concurrently with the execution of the Business Combination Agreement, Innoviz, certain equityholders of Innoviz, certain equityholders of Collective Growth, Perception and Antara Capital entered into the Registration Rights Agreement, pursuant to which Innoviz agreed to file a shelf registration statement with respect to the registrable securities under the Registration Rights Agreement within sixty (60) days of the Effective Time. Up to twice in any 12-month period, certain holders of registrable securities under the Registration Rights Agreement may request to sell all or any portion of their registrable securities in an underwritten offering so long as the total offering price is reasonably expected to exceed $75,000,000. Innoviz also agreed to provide customary “piggyback” registration rights. The Registration Rights Agreement also provides that Innoviz will pay certain expenses relating to such registrations and indemnify the shareholders against certain liabilities. The Registration Rights Agreement does not contemplate the payment of penalties or liquidated damages to the equityholders party thereto as a result of a failure to register, or delays with respect to the registration of, the registrable securities.

Confidentiality and Lockup Agreement

Concurrently with the execution of the Business Combination Agreement, Innoviz, certain equityholders of Innoviz, certain equityholders of Collective Growth, Perception and Antara entered into the Confidentiality and Lockup Agreement. Pursuant to the Confidentiality and Lockup Agreement, such shareholders have agreed that they will not, during the period beginning at the Effective Time and continuing to and including the date that is one hundred eighty (180) days after the date of closing of the Business Combination, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares, or any options or warrants to purchase any shares, or any securities convertible into, exchangeable for or that

 

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represent the right to receive shares, or any interest in any of the foregoing, whether now owned or hereinafter acquired, owned directly by such shareholder (including holding as a custodian) or with respect to which such shareholder has beneficial ownership within the rules and regulations of the SEC (in each case, subject to certain exceptions set forth in the Confidentiality and Lockup Agreement).

In connection with the Confidentiality and Lockup Agreement, at the Effective Time, the transfer restrictions set forth in certain letter agreements among Collective Growth and the Sponsor and officers and directors of Collective Growth will terminate.

Assignment, Assumption and Amendment Agreement

Upon the closing of the Business Combination Agreement, Innoviz, Collective Growth and Continental will enter into the Assignment, Assumption and Amendment Agreement. Such agreement will amend the Existing Warrant Agreement to provide for the assignment by Collective Growth of all its rights, title and interest in the outstanding warrants of Collective Growth to Innoviz. Pursuant to the amendment, all Collective Growth warrants under the Existing Warrant Agreement will no longer be exercisable for shares of Class A Stock, but instead will be exercisable for Innoviz ordinary shares.

Sponsor Letter Agreement

Concurrently with the execution of the Business Combination, the Sponsor and officers and directors of Collective Growth entered into the Sponsor Letter Agreement in favor of Innoviz and Collective Growth, pursuant to which they agreed to (i) vote all shares of Collective Growth Common Stock beneficially owned by them in favor of the Business Combination and each other proposal related to the Business Combination on the agenda at the meeting of Collective Growth shareholders called to approve the Business Combination, (ii) appear at such shareholder meeting for the purpose of establishing a quorum, (iii) vote all such shares against any action that would reasonably be expected to materially impede, interfere with, delay, postpone, or adversely affect the Business Combination or any of the other transactions contemplated by the Business Combination Agreement, and (iv) not to transfer, assign, or sell such shares, except to certain permitted transferees, prior to the consummation of the Transactions.

Forfeiture Agreement

Concurrently with the execution of the Business Combination Agreement, the Sponsor and officers and directors of Collective Growth entered into the Forfeiture Agreement in favor of Innoviz and Collective Growth, pursuant to which they agreed to forfeit an aggregate of 1,875,000 shares of Class B Stock and 187,500 Collective Growth warrants for cancellation in exchange for no consideration at the Effective Time.

Put Option Agreement

Concurrently with the execution of the Business Combination Agreement, Innoviz and Antara Capital entered into the Put Option Agreement, pursuant to which Innoviz caused Antara to subscribe for a number of Innoviz ordinary shares in the PIPE with an aggregate equity value equal to $70,000,000 pursuant to the Put Share Subscription Agreement. In consideration for entering into the Put Option Agreement, at the Effective Time, Innoviz agreed to issue to Antara Capital Master 3,784,753 Innoviz warrants and up to 3,125,000 Innoviz ordinary shares, with the number of Innoviz ordinary shares to be issued to Antara Capital Master to be calculated based on the amount of Initial Transaction Proceeds. If Innoviz issues to Perception the Perception Earnout Shares, then Innoviz will also issue to Antara Capital Master the Antara Earnout Shares, with the number of Innoviz ordinary shares to be issued to Antara Capital Master to be calculated based on the amount of Initial Transaction Proceeds.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a summary of the material U.S. federal income tax considerations of the Business Combination to U.S. Holders (as defined below) of Collective Growth’s common stock and warrants (collectively “Collective Growth securities”). The following summary, to the extent it constitutes matters of law and legal conclusions, is the opinion of Graubard Miller regarding the anticipated material U.S. federal income tax consequences to the U.S. Holders of Collective Growth securities, of (i) the conversion of shares of Collective Growth Common Stock into Innoviz ordinary shares, (ii) the conversion of Collective Growth Common Stock into a pro rata portion of the Collective Growth trust account if a U.S. Holder elects to exercise of its conversion right, (iii) the ownership and disposition of Innoviz ordinary shares following the Transactions, and (iv) the conversion of Collective Growth warrants into Innoviz warrants and the holding, exercise or disposition of Innoviz warrants. The following discussion also summarizes the material U.S. federal income tax consequences to U.S. Holders and Non-U.S. Holders (as defined below) of Collective Growth Common Stock that elect to have their common stock redeemed for cash and the material U.S. federal income tax consequences of the ownership and disposition of Innoviz ordinary shares and Innoviz warrants following the Business Combination. This discussion applies only to the Collective Growth securities, Innoviz ordinary shares and Innoviz warrants, as the case may be, that are held as “capital assets” within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) (generally, property held for investment).

The following does not purport to be a complete analysis of all potential tax effects arising in connection with the closing of the Business Combination, the redemptions of Collective Growth common stock or the ownership and disposal of Innoviz ordinary shares and Innoviz warrants. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or non-U.S. tax laws are not discussed. This discussion is based on the Code, Treasury regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”), in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect the tax consequences discussed below. Neither Collective Growth nor Innoviz has sought nor will seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS will not take or a court will not sustain a contrary position to that discussed below regarding the tax consequences discussed below.

This discussion does not address the tax treatment of Innoviz ordinary shares or Innoviz warrants to be issued to holders of outstanding Innoviz preferred shares, Perception, Company Management or Antara in connection with the Business Combination. This discussion does not address all U.S. federal income tax consequences relevant to a holder’s particular circumstances, including the impact of the Medicare contribution tax on net investment income and the alternative minimum tax. In addition, it does not address consequences relevant to holders subject to special rules, including, without limitation:

 

   

banks, insurance companies, and certain other financial institutions;

 

   

regulated investment companies and real estate investment trusts;

 

   

brokers, dealers or traders in securities;

 

   

traders in securities that elect to mark to market;

 

   

tax-exempt organizations or governmental organizations;

 

   

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

 

   

persons holding Collective Growth securities or Innoviz ordinary shares and/or Innoviz warrants, as the case may be, as part of a hedge, straddle, constructive sale, or other risk reduction strategy or as part of a conversion transaction or other integrated investment;

 

   

persons subject to special tax accounting rules as a result of any item of gross income with respect to Collective Growth securities or Innoviz ordinary shares and/or Innoviz warrants, as the case may be, being taken into account in an applicable financial statement;

 

   

persons that actually or constructively own 5% or more (by vote or value) of the outstanding Collective Growth Common Stock or, after the Business Combination, the issued Innoviz ordinary shares;

 

 

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“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;

 

   

S corporations, partnerships or other entities or arrangements treated as partnerships or other flow-through entities for U.S. federal income tax purposes (and investors therein);

 

   

U.S. Holders having a functional currency other than the U.S. dollar;

 

   

persons who hold or received Collective Growth securities or Innoviz ordinary shares and/or Innoviz warrants, as the case may be, pursuant to the exercise of any employee stock option or otherwise as compensation; and

 

   

tax-qualified retirement plans.

For purposes of this discussion, a “U.S. Holder” is any beneficial owner of shares of Collective Growth securities and Innoviz ordinary shares and/or Innoviz warrants, as the case may be, that is for U.S. federal income tax purposes:

 

   

an individual who is a citizen or resident of the United States;

 

   

a corporation (or other entity taxable as a corporation) created or organized under the laws of the United States, any state thereof, or the District of Columbia;

 

   

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

 

   

a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Collective Growth securities, Innoviz ordinary shares and/or Innoviz warrants, the tax treatment of an owner of such entity will depend on the status of the owners, the activities of the entity or arrangement and certain determinations made at the owner level. Accordingly, entities or arrangements treated as partnerships for U.S. federal income tax purposes and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.

THE U.S. FEDERAL INCOME TAX TREATMENT OF THE BUSINESS COMBINATION AND THE U.S. FEDERAL INCOME TAX TREATMENT TO HOLDERS OF COLLECTIVE GROWTH SECURITIES DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF COMPLEX PROVISIONS OF U.S. FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. IN ADDITION, THE U.S. FEDERAL INCOME TAX TREATMENT OF THE BUSINESS COMBINATION AND THE U.S. FEDERAL INCOME TAX TREATMENT OF OWNING INNOVIZ ORDINARY SHARES AND INNOVIZ WARRANTS TO ANY PARTICULAR HOLDER WILL DEPEND ON THE HOLDER’S PARTICULAR TAX CIRCUMSTANCES. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, AND LOCAL, AND NON-U.S. INCOME AND OTHER TAX CONSEQUENCES TO YOU, IN LIGHT OF YOUR PARTICULAR INVESTMENT OR TAX CIRCUMSTANCES, OF ACQUIRING, HOLDING, AND DISPOSING OF INNOVIZ ORDINARY SHARES AND INNOVIZ WARRANTS.

U.S. Federal Income Tax Treatment of Innoviz

Tax Residence of Innoviz for U.S. Federal Income Tax Purposes

Although Innoviz is incorporated and tax resident in Israel, the IRS may assert that it should be treated as a U.S. corporation (and therefore a U.S. tax resident) for U.S. federal income tax purposes pursuant to Section 7874 of the Code. For U.S. federal income tax purposes, a corporation is generally considered a U.S. “domestic” corporation (or U.S. tax resident) if it is organized in the United States, and a corporation is generally considered a “foreign” corporation (or non-U.S. tax resident) if it is not a U.S. corporation. Because Innoviz is an entity incorporated and tax resident in Israel, it would generally be classified as a foreign corporation (or non-U.S. tax resident) under these rules. Section 7874 of the Code provides an exception under which a foreign incorporated and foreign tax resident entity may, in certain circumstances, be treated as a U.S. corporation for U.S. federal income tax purposes.

 

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Under Code Section 7874, a corporation created or organized outside the United States (i.e., a foreign corporation) will nevertheless be treated as a U.S. corporation for U.S. federal income tax purposes when (i) the foreign corporation directly or indirectly acquires substantially all of the assets held directly or indirectly by a U.S. corporation (including the indirect acquisition of assets of the U.S. corporation by acquiring the outstanding shares of the U.S. corporation), (ii) the shareholders of the acquired U.S. corporation hold, by vote or value, at least 80% (or 60% if the Third Country Rule, as defined herein, applies) of the shares of the foreign acquiring corporation after the acquisition by reason of holding shares in the U.S. acquired corporation (the “Section 7874 Percentage”), and (iii) the foreign corporation’s “expanded affiliated group” does not have substantial business activities in the foreign corporation’s country of tax residency relative to such expanded affiliated group’s worldwide activities (the “Substantial Business Activities Exception”). In order to satisfy the Substantial Business Activities Exception, at least 25% of the employees (by headcount and compensation), real and tangible assets and gross income of the foreign acquiring corporation’s “expanded affiliated group” must be based, located and derived, respectively, in the country in which the foreign acquiring corporation is a tax resident after the acquisition. The Treasury regulations promulgated under Code Section 7874 (the “Section 7874 Regulations”) generally also provide that if (i) there is an acquisition of substantially all of the assets held directly or indirectly by a U.S. corporation after which the shareholders of the acquired U.S. corporation hold, by vote or value, at least 60% of the shares of the foreign acquiring corporation by reason of holding shares in the U.S. acquired corporation, and (ii) in a related acquisition, such foreign acquiring corporation acquires another foreign corporation exceeding a certain threshold value, and the foreign acquiring corporation is not tax resident in the foreign country in which the acquired foreign corporation was tax resident prior to the transactions, then the foreign acquiring corporation will be treated as a domestic corporation for U.S. federal income tax purposes (the “Third Country Rule”). The Section 7874 Regulations further provide for a number of special rules that aggregate multiple acquisitions of U.S. corporations for purposes of Code Section 7874 as part of a plan or conducted over a 36-month period. Moreover, certain acquisitions of U.S. corporations over a 36-month period will impact the Section 7874 Percentage, making it more likely that Code Section 7874 will apply to a foreign acquiring corporation.

Innoviz will indirectly acquire substantially all of the assets of Collective Growth through the Business Combination. Innoviz does not expect the Third Country Rule to be applicable to the Business Combination. As a result, Section 7874 of the Code may apply to cause Innoviz to be treated as a U.S. corporation for U.S. federal income tax purposes following the Business Combination depending on whether the Section 7874 Percentage equals or exceeds 80%, subject to the applicability of the Substantial Business Activities Exception.

Based upon the terms of the Business Combination, the rules for determining share ownership under Code Section 7874 and the Section 7874 Regulations, and certain factual assumptions, Collective Growth and Innoviz currently expect that the Section 7874 Percentage of the Collective Growth stockholders in Innoviz should be less than 80% after the Business Combination. Accordingly, Innoviz is not expected to be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code. The calculation of the Section 7874 Percentage is complex and is subject to detailed regulations (the application of which is uncertain in various respects and would be impacted by changes in such U.S. Treasury regulations with possible retroactive effect) and is subject to certain factual uncertainties. Whether the Section 7874 Percentage is less than 80% must be finally determined after completion of the Business Combination, by which time there could be adverse changes to the relevant facts and circumstances. Moreover, former Collective Growth securityholders will be deemed to own an amount of Innoviz ordinary shares in respect to certain redemptions by Collective Growth of Collective Growth’s common stock prior to the Business Combination for purposes of determining the ownership percentage of former Collective Growth securityholders for purposes of Section 7874 of the Code. Accordingly, there can be no assurance that the IRS will not challenge the status of Innoviz as a foreign corporation under Code Section 7874 or that such challenge would not be sustained by a court.

If the IRS were to successfully challenge under Code Section 7874 Innoviz’s status as a foreign corporation for U.S. federal income tax purposes, Innoviz and certain Innoviz shareholders would be subject to significant adverse tax consequences, including a higher effective corporate income tax rate on Innoviz and future

 

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withholding taxes on certain Innoviz shareholders, depending on the application of any income tax treaty that might apply to reduce such withholding taxes.

However, even if the Section 7874 Percentage was such that Innoviz were still respected as a foreign corporation under Code Section 7874, Innoviz may be limited in using its equity to engage in future acquisitions of U.S. corporations over a 36-month period following the Business Combination. If Innoviz were to be treated as acquiring substantially all of the assets of a U.S. corporation within a 36-month period after the Business Combination, the Section 7874 Regulations would exclude certain shares of Innoviz attributable to the Business Combination for purposes of determining the Section 7874 Percentage of that subsequent acquisition, making it more likely that Code Section 7874 would apply to such subsequent acquisition.

The remainder of this discussion assumes that Innoviz will not be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code.

Utilization of Collective Growth’s Tax Attributes and Certain Other Adverse Tax Consequences to Innoviz and Innoviz’s Shareholders.

Following the acquisition of a U.S. corporation by a foreign corporation, Code Section 7874 can limit the ability of the acquired U.S. corporation and its U.S. affiliates to use U.S. tax attributes (including net operating losses and certain tax credits) to offset U.S. taxable income resulting from certain transactions, as well as result in certain other adverse tax consequences, even if the acquiring foreign corporation is respected as a foreign corporation for purposes of Code Section 7874. Specifically, Code Section 7874 can apply in this manner if (i) the foreign corporation acquires, directly or indirectly, substantially all of the properties held directly or indirectly by a U.S. corporation, (ii) after the acquisition, the former shareholders of the acquired U.S. corporation hold at least 60% (by either vote or value) but less than 80% (by vote and value) of the shares of the foreign acquiring corporation by reason of holding shares in the acquired U.S. corporation, (iii) the Third Country Rule does not apply, and (iv) the foreign corporation’s “expanded affiliated group” does not meet the Substantial Business Activities Exception.

Based upon the terms of the Business Combination, the rules for determining share ownership under Section 7874 of the Code and the Section 7874 Regulations, and certain factual assumptions, Collective Growth and Innoviz currently expect that the Section 7874 Percentage should be less than 60% after the Business Combination. Accordingly, the limitations and other rules described above are not expected to apply to Innoviz or Collective Growth after the Business Combination.

If the Section 7874 Percentage applicable to the Business Combination is at least 60% but less than 80% and the Third Country Rule does not apply (as expected), Innoviz and certain of Innoviz’s shareholders may be subject to adverse tax consequences including, but not limited to, restrictions on the use of tax attributes with respect to “inversion gain” recognized over a 10-year period following the transaction, disqualification of dividends paid from preferential “qualified dividend income” rates and the requirement that any U.S. corporation owned by Innoviz include as “base erosion payments” that may be subject to a minimum U.S. federal income tax any amounts treated as reductions in gross income paid to certain related foreign persons. Furthermore, certain “disqualified individuals” (including officers and directors of a U.S. corporation) may be subject to an excise tax on certain stock-based compensation held thereby at a rate of 20%. However, as a blank check company whose assets are primarily comprised of cash and cash equivalents, it is not expected that Collective Growth will have a significant amount of inversion gain as a result of the Business Combination. Moreover, if it is determined that the Section 7874 Percentage is at least 60% and that Innoviz is tax resident in a jurisdiction other than Israel, the Third Country Rule would apply and Innoviz would be treated as a U.S. corporation under Section 7874 of the Code in the same manner as described above under “—Tax Residence of Innoviz for U.S. Federal Income Tax Purposes.”

The above determination, however, is subject to detailed regulations (the application of which is uncertain in various respects and would be impacted by future changes in such U.S. Treasury regulations, with possible

 

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retroactive effect) and is subject to certain factual uncertainties. Whether the Section 7874 Percentage is less than 60% must be finally determined after completion of the Business Combination, by which time there could be adverse changes to the relevant facts and circumstances. There can be no assurance that the IRS will not challenge whether Innoviz is subject to the above rules or that such a challenge would not be sustained by a court. If the IRS successfully applied these rules to Innoviz, significant adverse tax consequences would result for Innoviz and for certain Innoviz shareholders, including a higher effective corporate tax rate on Innoviz.

U.S. Holders

U.S. Federal Income Tax Considerations of the Business Combination

Tax Consequences of the Business Combination Under Section 368(a) of the Code

The parties to the Business Combination intend that the Business Combination qualify as a reorganization within the meaning of Section 368(a) of the Code (a “reorganization”). To qualify as a reorganization, a transaction must satisfy certain requirements, including, among others, that the acquiring corporation (or, in the case of certain reorganizations structured similarly to the Business Combination, its corporate parent) continue, either directly or indirectly through certain controlled corporations, either a significant line of the acquired corporation’s historic business or use a significant portion of the acquired corporation’s historic business assets in a business, in each case, within the meaning of Treasury regulations Section 1.368-1(d). However, due to the absence of guidance bearing directly on how the above rules apply in the case of an acquisition of a corporation with no active business and only investment-type assets, such as Collective Growth, the qualification of the Business Combination as a reorganization is not free from doubt. Moreover, the closing of the Business Combination is not conditioned upon the receipt of an opinion of counsel that the Business Combination will qualify as a reorganization, and neither Collective Growth nor Innoviz intends to request a ruling from the IRS regarding the U.S. federal income tax treatment of the Business Combination. Accordingly, no assurance can be given that the IRS will not challenge the Business Combination’s qualification as a reorganization or that a court will not sustain such a challenge by the IRS.

If, notwithstanding the above, at the Effective Time any requirement for Section 368(a) is not met, a U.S. Holder of Collective Growth securities would recognize gain or loss in an amount equal to the difference, if any, between the fair market value as of the closing date of the Business Combination of Innoviz ordinary shares and/or Innoviz warrants received by such holder in the Business Combination over such U.S. Holder’s tax basis in the Collective Growth securities surrendered by such U.S. Holder in the Business Combination. Any gain or loss so recognized would generally be long-term capital gain or loss if the U.S. Holder had held the Collective Growth securities for more than one year (or short-term capital gain otherwise). Long-term capital gains of non-corporate U.S. Holders (including individuals) currently are eligible for preferential U.S. federal income tax rates. However, the deductibility of capital losses is subject to limitations. A U.S. Holder’s holding period in the Innoviz ordinary shares and/or Innoviz warrants received in the Business Combination, if any, would not include the holding period for the Collective Growth securities surrendered in exchange therefor.

Tax Consequences of the Business Combination Under Section 367(a) of the Code

Section 367(a) of the Code and the Treasury regulations promulgated thereunder provide that, where a U.S. person exchanges stock or securities in a U.S. corporation for stock or securities in a non-U.S. corporation in a transaction that would otherwise qualify as a reorganization under Section 368(a) of the Code, the U.S. person is required to recognize any gain (but not loss) realized on such exchange unless certain requirements are satisfied. In general, for the Business Combination to meet these additional requirements, certain reporting requirements must be satisfied and (i) no more than 50% of both the total voting power and the total value of the stock of the transferee non-U.S. corporation is received, in the aggregate, by the “U.S. transferors” (as defined in the Treasury regulations and computed taking into account direct, indirect and constructive ownership) in the transaction; (ii) no more than 50% of each of the total voting power and the total value of the stock of the transferee non-U.S. corporation is owned, in the aggregate, immediately after the transaction by “U.S. persons” (as defined in the Treasury regulations) that are either officers or directors or “five-percent target shareholders” (as defined in the

 

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Treasury regulations and computed taking into account direct, indirect and constructive ownership) of the transferred U.S. corporation; and (iii) the “active trade or business test” as defined in Treasury regulations Section 1.367(a)-3(c)(3) must be satisfied. Conditions (i), (ii), and (iii) are expected to be met, and, as a result, the Business Combination is expected to satisfy the applicable requirements under Section 367(a) of the Code on account of such conditions. Accordingly, it is intended that the Business Combination not result in gain recognition by a U.S. Holder exchanging Collective Growth common stock for Innoviz ordinary shares so long as either (A) the U.S. Holder is not a “five-percent transferee shareholder” (as defined in the Treasury regulations and computed taking into account direct, indirect and constructive ownership) of the transferee non-U.S. corporation (by total voting power or by total value) or (B) the U.S. Holder is a “five-percent transferee shareholder” of the transferee non-U.S. corporation and enters into an agreement with the IRS to recognize gain under certain circumstances. All U.S. Holders that will own 5% or more of either the total voting power or the total value of the outstanding shares of Innoviz after the Business Combination (taking into account, for this purpose, ownership of Innoviz ordinary shares, and any Innoviz ordinary shares not acquired in connection with the Business Combination) may want to enter into a valid “gain recognition agreement” under applicable Treasury regulations and are strongly urged to consult their own tax advisors to determine the particular consequences to them of the Business Combination.

Whether the requirements described above are met will depend on facts existing at the Effective Time, and the closing of the Business Combination is not conditioned upon the receipt of an opinion of counsel or ruling from the IRS that the Business Combination will not result in gain being recognized by U.S. Holders of Collective Growth securities under Section 367(a) of the Code (other than any such holder that would own, actually or constructively, 5% or more (by vote or value) of the outstanding Innoviz ordinary shares immediately after the Business Combination). In addition, no assurance can be given that the IRS will not challenge that the relevant requirements under Section 367(a) of the Code and the Treasury regulations promulgated thereunder have been met with respect to the Business Combination, or that a court would not sustain such a challenge.

If the Business Combination does meet the requirements of Section 368(a) of the Code but, at the Effective Time, any requirement for Section 367(a) of the Code not to impose gain on U.S. Holder is not satisfied, then a U.S. Holder of Collective Growth common stock would recognize gain (but not loss) in an amount equal to the excess, if any, of the fair market value as of the closing date of the Business Combination of the Innoviz ordinary shares received by such holder in the Business Combination over such U.S. Holder’s tax basis in the Collective Growth common stock surrendered by such U.S. Holder in the Business Combination. Any gain so recognized would generally be long-term capital gain if the U.S. Holder had held the Collective Growth common stock for more than one year at the Effective Time (or short-term capital gain otherwise). Long-term capital gain of non-corporate U.S. Holders (including individuals) currently is eligible for preferential U.S. federal income tax rates. A U.S. Holder’s holding period in the Innoviz ordinary shares received in the Business Combination, if any, would not include the holding period for the Collective Growth common stock surrendered in exchange therefor.

U.S. Holders exchanging Collective Growth Securities for Innoviz Ordinary Shares and/or Innoviz Warrants

If the Business Combination qualifies as a reorganization under Section 368(a) of the Code and is not taxable under Section 367(a) of the Code, a U.S. Holder generally should not recognize gain or loss if, pursuant to the Business Combination, the U.S. Holder either (i) exchanges only Collective Growth Common Stock (but not Collective Growth warrants) for Innoviz ordinary shares, (ii) exchanges Collective Growth warrants for Innoviz warrants, or (iii) both exchanges Collective Growth Common Stock for Innoviz ordinary shares and exchanges its Collective Growth warrants for Innoviz warrants.

In such a case, the aggregate tax basis of the Innoviz ordinary shares received by a U.S. Holder in the Business Combination should be equal to the aggregate adjusted tax basis of the Collective Growth Common Stock surrendered in exchange therefor. The tax basis in a Innoviz warrant received by a U.S. Holder in the Business Combination should be equal to the adjusted tax basis of an Innoviz warrant exchanged therefor. The

 

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holding period of the Innoviz ordinary shares and/or Innoviz warrants received by a U.S. Holder in the Business Combination should include the period during which the Collective Growth Common Stock and/or warrants exchanged therefor were held by such U.S. Holder.

U.S. Holders Exercising Redemption Rights with Respect to Collective Growth Common Stock

In the event that a U.S. Holder’s shares of Collective Growth Common Stock are redeemed for cash pursuant to the redemption provisions described herein, the treatment of such redemption for U.S. federal income tax purposes will depend on whether the redemption qualifies as a sale of stock under Section 302 of the Code. Whether a redemption qualifies for sale treatment will depend largely on the total number of shares of Collective Growth Common Stock treated as held by the U.S. Holder relative to all of the shares of Collective Growth Common Stock outstanding both before and after the redemption.

The redemption of Collective Growth Common Stock generally will be treated as a sale of stock (rather than as a corporate distribution) if the redemption (i) results in a “complete termination” of the U.S. Holder’s interest in Collective Growth, (ii) is “substantially disproportionate” with respect to the U.S. Holder or (iii) is “not essentially equivalent to a dividend” with respect to the U.S. Holder. These tests are explained more fully below.

In determining whether any of the foregoing tests are satisfied, a U.S. Holder generally should take into account not only Collective Growth Common Stock actually owned by such U.S. Holder but also Collective Growth Common Stock constructively owned by it. A U.S. Holder may constructively own, in addition to shares owned directly, shares owned by certain related individuals and entities in which the U.S. Holder has an interest or that have an interest in such U.S. Holder, as well as any shares the U.S. Holder has a right to acquire by exercise of an option, which would generally include Collective Growth Common Stock or Innoviz ordinary shares which could be directly or constructively acquired pursuant to the exercise of Collective Growth warrants or Innoviz warrants.

There will be a complete termination of a U.S. Holder’s interest if either (i) all of the Collective Growth Common Stock actually and constructively owned by the U.S. Holder is redeemed or (ii) all of the Collective Growth Common Stock actually owned by the U.S. Holder is redeemed and the U.S. Holder is eligible to waive, and effectively waives in accordance with specific rules, the attribution of shares owned by certain family members and the U.S. Holder does not constructively own any other shares. In order to meet the “substantially disproportionate” test, the percentage of outstanding voting stock actually or constructively owned by a U.S. Holder immediately following the redemption generally must be less than 80% of the voting stock actually or constructively owned by such U.S. Holder immediately prior to the redemption. The redemption of the Collective Growth Common Stock will not be essentially equivalent to a dividend if a U.S. Holder’s redemption results in a “meaningful reduction” of the U.S. Holder’s proportionate interest in Collective Growth. Whether the redemption will result in a meaningful reduction in a U.S. Holder’s proportionate interest in Collective Growth will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority shareholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a “meaningful reduction.” U.S. Holders should consult with their tax advisors as to the tax consequences of a redemption.

If the redemption qualifies as a sale of stock by the U.S. Holder under Section 302 of the Code, the U.S. Holder would generally be required to recognize gain or loss in an amount equal to the difference, if any, between the amount of cash received and the tax basis of the shares of Collective Growth Common Stock redeemed. Such gain or loss generally would be treated as capital gain or loss if such shares were held as a capital asset on the date of the redemption. A U.S. Holder’s tax basis in such holder’s Collective Growth Common Stock generally will equal the cost of such shares.

If the redemption does not qualify as a sale of stock under Section 302 of the Code, then the U.S. Holder will be treated as receiving a corporate distribution. Such distribution generally will constitute a dividend for U.S. federal income tax purposes to the extent paid from current or accumulated earnings and profits, as

 

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determined under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted tax basis in such U.S. Holder’s Collective Growth Common Stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the Collective Growth Common Stock.

Distributions on Innoviz Ordinary Shares

If Innoviz makes distributions of cash or property on the Innoviz ordinary shares, such distributions will be treated first as a dividend to the extent of Innoviz’s current and accumulated earnings and profits (as determined for U.S. federal income tax purposes), and then as a tax-free return of capital to the extent of the U.S. Holder’s tax basis, with any excess treated as capital gain from the sale or exchange of the shares. If Innoviz does not provide calculations of its earnings and profits under U.S. federal income tax principles, a U.S. Holder should expect all cash distributions to be reported as dividends for U.S. federal income tax purposes. Any dividend will not be eligible for the dividends received deduction allowed to corporations in respect of dividends received from U.S. corporations.

Subject to the discussions above under “—Utilization of Collective Growth’s Tax Attributes and Certain Other Adverse Tax Consequences to Innoviz and Innoviz’s Shareholders” and below under “—Passive Foreign Investment Company Rules,” dividends received by certain non-corporate U.S. Holders (including individuals) may be “qualified dividend income,” which is taxed at the lower applicable capital gains rate, provided that:

 

   

either (a) the shares are readily tradable on an established securities market in the United States, or (b) Innoviz is eligible for the benefits of a qualifying income tax treaty with the United States that includes an exchange of information program;

 

   

Innoviz is neither a PFIC (as discussed below under below under “—Passive Foreign Investment Company Rules”) nor treated as such with respect to the U.S. Holder for Innoviz’s taxable year in which the dividend is paid or the preceding taxable year;

 

   

the U.S. Holder satisfies certain holding period requirements; and

 

   

the U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property.

There can be no assurances that Innoviz will be eligible for benefits of an applicable comprehensive income tax treaty between the United States and Israel. In addition, there also can be no assurance that Innoviz ordinary shares will be considered “readily tradable” on an established securities market in accordance with applicable legal authorities. Furthermore, Innoviz will not constitute a qualified foreign corporation for purposes of these rules if it is a PFIC for the taxable year in which it pays a dividend or for the preceding taxable year. See “—Passive Foreign Investment Company Rules.” U.S. Holders should consult their tax advisors regarding the availability of the lower rate for dividends paid with respect to Innoviz ordinary shares.

Subject to certain exceptions, dividends on Innoviz ordinary shares will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be limited to the gross amount of the dividend, multiplied by a fraction, the numerator of which is the reduced rate applicable to qualified dividend income and the denominator of which is the highest rate of tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by Innoviz with respect to the Innoviz ordinary shares generally will constitute “passive category income” but could, in the case of certain U.S. Holders, constitute “general category income”.

Sale, Exchange, Redemption or Other Taxable Disposition of Innoviz Ordinary Shares and Innoviz Warrants

Subject to the discussion below under “—Passive Foreign Investment Company Rules,” a U.S. Holder generally will recognize gain or loss on any sale, exchange, redemption or other taxable disposition of Innoviz

 

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ordinary shares or Innoviz warrants in an amount equal to the difference between (i) the amount realized on the disposition and (ii) such U.S. Holder’s adjusted tax basis in such shares and/or warrants. Any gain or loss recognized by a U.S. Holder on a taxable disposition of Innoviz ordinary shares or Innoviz warrants generally will be capital gain or loss. A non-corporate U.S. Holder, including an individual, who has held the Innoviz ordinary shares and/or Innoviz warrants for more than one year generally will be eligible for reduced tax rates for such long-term capital gains. The deductibility of capital losses is subject to limitations.

Any such gain or loss recognized generally will be treated as U.S. source income or loss. Accordingly, in the event any Israeli tax (including withholding tax) is imposed upon such sale or other disposition, a U.S. Holder may not be able to utilize foreign tax credits unless such holder has foreign source income or gain in the same category from other sources. Moreover, there are special rules under the income tax treaty between the United States and Israel (the “Treaty”), which may impact a U.S. Holder’s ability to claim a foreign tax credit. U.S. Holders are urged to consult their tax advisor regarding the ability to claim a foreign tax credit and the application of the Treaty to such U.S. Holder’s particular circumstances.

Exercise or Lapse of an Innoviz Warrant

Except as discussed below with respect to the cashless exercise of a Company Warrant, a U.S. Holder generally will not recognize gain or loss upon the acquisition of a Innoviz ordinary share on the exercise of a Company Warrant for cash. A U.S. Holder’s tax basis in a Innoviz ordinary shares received upon exercise of the Company Warrant generally should be an amount equal to the sum of the U.S. Holder’s tax basis in the Collective Growth warrant exchanged therefor (assuming the Business Combination is not a taxable transaction under Sections 368(a) or 367(a) of the Code, as discussed above) and the exercise price. The U.S. Holder’s holding period for a Innoviz ordinary share received upon exercise of the Company Warrant will begin on the date following the date of exercise (or possibly the date of exercise) of the Company Warrant and will not include the period during which the U.S. Holder held the Company Warrant. If a Company Warrant is allowed to lapse unexercised, a U.S. Holder generally will recognize a capital loss equal to such holder’s tax basis in the Company Warrant.

The tax consequences of a cashless exercise of a Company Warrant are not clear under current tax law. A cashless exercise may be tax-deferred, either because the exercise is not a gain realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either tax-deferred situation, a U.S. Holder’s basis in the Innoviz ordinary shares received would equal the U.S. Holder’s basis in the Innoviz warrants exercised therefore. If the cashless exercise is not treated as a gain realization event, a U.S. Holder’s holding period in the Innoviz ordinary shares would be treated as commencing on the date following the date of exercise (or possibly the date of exercise) of the Innoviz warrants. If the cashless exercise were treated as a recapitalization, the holding period of the Innoviz ordinary shares would include the holding period of the Innoviz warrants exercised therefore.

It is also possible that a cashless exercise of a Company Warrant could be treated in part as a taxable exchange in which gain or loss would be recognized in the manner set forth above under “—Sale, Exchange, Redemption or Other Taxable Disposition of Innoviz Ordinary Shares and Innoviz Warrants.” In such event, a U.S. Holder could be deemed to have surrendered warrants equal to the number of Innoviz ordinary shares having an aggregate fair market value equal to the exercise price for the total number of warrants to be exercised. The U.S. Holder would recognize capital gain or loss in an amount generally equal to the difference between (i) the fair market value of the Innoviz warrants deemed surrendered and (ii) the U.S. Holder’s tax basis in such Innoviz warrants deemed surrendered. In this case, a U.S. Holder’s tax basis in the Innoviz ordinary shares received would equal the sum of (i) U.S. Holder’s tax basis in the Innoviz warrants deemed exercised and (ii) the exercise price of such Innoviz warrants. A U.S. Holder’s holding period for the Innoviz ordinary shares received in such case generally would commence on the date following the date of exercise (or possibly the date of exercise) of the Innoviz warrants.

Due to the absence of authority on the U.S. federal income tax treatment of a cashless exercise of warrants, there can be no assurance which, if any, of the alternative tax consequences and holding periods described above

 

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would be adopted by the IRS or a court of law. Accordingly, U.S. Holders should consult their tax advisors regarding the tax consequences of a cashless exercise of Innoviz warrants.

Possible Constructive Distributions

The terms of each Company Warrant provide for an adjustment to the number of Innoviz ordinary shares for which the Company Warrant may be exercised or to the exercise price of the Company Warrant in certain events, as discussed in the section of this registration statement captioned “Description of Innoviz warrants.” An adjustment which has the effect of preventing dilution generally is not taxable. A U.S. Holder of a Company Warrant would, however, be treated as receiving a constructive distribution from Innoviz if, for example, the adjustment increases the holder’s proportionate interest in Innoviz’s assets or earnings and profits (for instance, through an increase in the number of Innoviz ordinary shares that would be obtained upon exercise of such warrant) as a result of a distribution of cash or other property such as other securities to the holders of the Innoviz ordinary shares which is taxable to the U.S. Holders of such shares as described under “—Distributions on Innoviz ordinary shares” above. Such constructive distribution would be subject to tax as described under that section in the same manner as if the U.S. Holder of such Company Warrant received a cash distribution from Innoviz equal to the fair market value of such increased interest.

Passive Foreign Investment Company Rules

The treatment of U.S. Holders of the Innoviz ordinary shares could be materially different from that described above, if Innoviz is treated as a “passive foreign investment company” for U.S. federal income tax purposes. A non-U.S. entity treated as a corporation for U.S. federal income tax purposes generally will be a PFIC for U.S. federal income tax purposes for any taxable year if either:

 

   

at least 75% of its gross income for such year is passive income (such as interest income); or

 

   

at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income.

For this purpose, Innoviz will be treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other entity treated as a corporation for U.S. federal income tax purposes in which Innoviz own, directly or indirectly, 25% or more (by value) of the stock.

Based on the current and anticipated composition of the income, assets and operations of Innoviz and its subsidiaries, there is a substantial risk that Innoviz will be a PFIC for U.S. federal income tax purposes for the taxable year that includes the Business Combination or for future taxable years. As discussed further below, Innoviz intends to make available information that will allow U.S. Holders to make a QEF election with respect to their Innoviz ordinary shares.

Whether Innoviz is treated as a PFIC is determined on an annual basis. The determination of whether a non-U.S. corporation is a PFIC is a factual determination that depends on, among other things, the composition of Innoviz’s income and assets, and the market value of its shares and assets, including the composition of income and assets and the market value of shares and assets of its subsidiaries, from time to time, and thus the determination can only be made annually after the close of each taxable year. Under the PFIC rules, if Innoviz were considered a PFIC at any time that a U.S. Holder owns Innoviz ordinary shares, Innoviz would continue to be treated as a PFIC with respect to such investment unless (i) it ceased to be a PFIC and (ii) the U.S. Holder made a “deemed sale” election under the PFIC rules. If such election is made, a U.S. Holder will be deemed to have sold its Innoviz ordinary shares at their fair market value on the last day of the last taxable year in which Innoviz is classified as a PFIC, and any gain from such deemed sale would be subject to the consequences described below. After the deemed sale election, the Innoviz ordinary shares with respect to which the deemed sale election was made will not be treated as shares in a PFIC unless Innoviz subsequently becomes a PFIC.

For each taxable year that Innoviz is treated as a PFIC with respect to a U.S. Holder’s Innoviz ordinary shares, the U.S. Holder will be subject to special tax rules with respect to any “excess distribution” (as defined

 

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below) received and any gain realized from a sale or disposition (including a pledge) of its Innoviz ordinary shares (collectively the “excess distribution rules”), unless the U.S. Holder makes a valid QEF or mark-to-market election as discussed below. Distributions received by a U.S. Holder in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or the U.S. Holder’s holding period for the Innoviz ordinary shares will be treated as excess distributions. Under these special tax rules:

 

   

the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the Innoviz ordinary shares;

 

   

the amount allocated to the current taxable year, and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which Innoviz is a PFIC, will be treated as ordinary income; and

 

   

the amount allocated to each other taxable year will be subject to the highest tax rate in effect for individuals or corporations, as applicable, for each such year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

Under the excess distribution rules, the tax liability for amounts allocated to taxable years prior to the year of disposition or excess distribution cannot be offset by any net operating losses, and gains (but not losses) realized on the sale of the Innoviz ordinary shares cannot be treated as capital gains, even though the U.S. Holder holds the Innoviz ordinary shares as capital assets.

Certain of the PFIC rules may impact U.S. Holders with respect equity interests in subsidiaries and other entities which Innoviz may hold, directly or indirectly, that are PFICs (collectively, “Lower-Tier PFICs”). There can be no assurance, however, that Innoviz does not own, or will not in the future acquire, an interest in a subsidiary or other entity that is or would be treated as a Lower-Tier PFIC. U.S. Holders should consult their tax advisors regarding the application of the PFIC rules to any of Innoviz’s subsidiaries.

If Innoviz is a PFIC, a U.S. Holder of shares in Innoviz may avoid taxation under the excess distribution rules described above by making a “qualified electing fund” (“QEF”) election. However, a U.S. Holder may make a QEF election with respect to its Innoviz ordinary shares only if Innoviz provides U.S. Holders on an annual basis with certain financial information specified under applicable U.S. Treasury regulations. Innoviz intends to provide U.S. Holders with the required information on an annual basis to allow U.S. Holders to make a QEF election with respect to the Innoviz ordinary shares. There can be no assurance, however, that Innoviz will timely provide such information for the current year or subsequent years. The failure to provide such information on an annual basis could prevent a U.S. Holder from making a QEF election or result in the invalidation or termination of a U.S. Holder’s prior QEF election. In addition, U.S. Holders of Innoviz warrants will not be able to make a QEF election with respect to their warrants.

A U.S. Holder that makes a QEF election with respect to its Innoviz ordinary shares would generally be required to include in income for each year that Innoviz is treated as a PFIC the U.S. Holder’s pro rata share of Innoviz’s ordinary earnings for the year (which would be subject to tax as ordinary income) and net capital gains for the year (which would be subject to tax at the rates applicable to long-term capital gains), without regard to the amount of any distributions made in respect of the Innoviz ordinary shares. Any net deficits or net capital losses of Innoviz for a taxable year would not be passed through and included on the tax return of the U.S. Holder, however. A U.S. Holder’s basis in the Innoviz ordinary shares would be increased by the amount of income inclusions under the qualified electing fund rules. Dividends actually paid on the Innoviz ordinary shares generally would not be subject to U.S. federal income tax to the extent of prior income inclusions and would reduce the U.S. Holder’s basis in the Innoviz ordinary shares by a corresponding amount.

If Innoviz owns any interests in a Lower-Tier PFIC, a U.S. Holder generally must make a separate QEF election for each Lower-Tier PFIC, subject to Innoviz’s providing the relevant tax information for each Lower-Tier PFIC on an annual basis.

If a U.S. Holder does not make a QEF election (or a mark-to-market election, as discussed below) effective from the first taxable year of a U.S. Holder’s holding period for the Innoviz ordinary shares in which Innoviz is a

 

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PFIC, then the Innoviz ordinary shares will generally continue to be treated as an interest in a PFIC, and the U.S. Holder generally will remain subject to the excess distribution rules. A U.S. Holder that first makes a QEF election in a later year may avoid the continued application of the excess distribution rules to its Innoviz ordinary shares by making a “deemed sale” election. In that case, the U.S. Holder will be deemed to have sold the Innoviz ordinary shares at their fair market value on the first day of the taxable year in which the QEF election becomes effective, and any gain from such deemed sale would be subject to the excess distribution rules described above. A U.S. Holder that is eligible to make a QEF election with respect to its Innoviz ordinary shares generally may do so by providing the appropriate information to the IRS in the U.S. Holder’s timely filed tax return for the year in which the election becomes effective.

U.S. Holders should consult their tax advisors as to the availability and desirability of a QEF election.

Alternatively, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for its Innoviz ordinary shares to elect out of the excess distribution rules discussed above. If a U.S. Holder makes a mark-to-market election with respect to its Innoviz ordinary shares, such U.S. Holder will include in income for each year that Innoviz is treated as a PFIC with respect to such Innoviz ordinary shares an amount equal to the excess, if any, of the fair market value of the Innoviz ordinary shares as of the close of the U.S. Holder’s taxable year over the adjusted basis in the Innoviz ordinary shares. A U.S. Holder will be allowed a deduction for the excess, if any, of the adjusted basis of the Innoviz ordinary shares over their fair market value as of the close of the taxable year. However, deductions will be allowed only to the extent of any net mark-to-market gains on the Innoviz ordinary shares included in the U.S. Holder’s income for prior taxable years. Amounts included in income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Innoviz ordinary shares, will be treated as ordinary income. Ordinary loss treatment will also apply to the deductible portion of any mark-to-market loss on the Innoviz ordinary shares, as well as to any loss realized on the actual sale or disposition of the Innoviz ordinary shares, to the extent the amount of such loss does not exceed the net mark-to-market gains for such Innoviz ordinary shares previously included in income. A U.S. Holder’s basis in the Innoviz ordinary shares will be adjusted to reflect any mark-to-market income or loss. If a U.S. Holder makes a mark-to-market election, any distributions Innoviz makes would generally be subject to the rules discussed above under “—Distributions on Innoviz ordinary shares,” except the lower rates applicable to qualified dividend income would not apply. U.S. Holders of Innoviz warrants will not be able to make a mark-to-market election with respect to their Innoviz warrants.

The mark-to-market election is available only for “marketable stock,” which is stock that is regularly traded on a qualified exchange or other market, as defined in applicable U.S. Treasury regulations. The Innoviz ordinary shares, which are expected to be listed on Nasdaq, are expected to qualify as marketable stock for purposes of the PFIC rules, but there can be no assurance that Innoviz ordinary shares will be “regularly traded” for purposes of these rules. Because a mark-to-market election cannot be made for equity interests in any Lower-Tier PFICs, a U.S. Holder that does not make the applicable QEF elections generally will continue to be subject to the excess distribution rules with respect to its indirect interest in any Lower-Tier PFICs as described above, even if a mark-to-market election is made for Innoviz.

If a U.S. Holder does not make a mark-to-market election (or a QEF election, as discussed above) effective from the first taxable year of a U.S. Holder’s holding period for the Innoviz ordinary shares in which Innoviz is a PFIC, then the U.S. Holder generally will remain subject to the excess distribution rules. A U.S. Holder that first makes a mark-to-market election with respect to the Innoviz ordinary shares in a later year will continue to be subject to the excess distribution rules during the taxable year for which the mark-to-market election becomes effective, including with respect to any mark-to-market gain recognized at the end of that year. In subsequent years for which a valid mark-to-mark election remains in effect, the excess distribution rules generally will not apply. A U.S. Holder that is eligible to make a mark-to-market with respect to its Innoviz ordinary shares may do so by providing the appropriate information on IRS Form 8621 and timely filing that form with the U.S. Holder’s tax return for the year in which the election becomes effective.

U.S. Holders should consult their tax advisors as to the availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any Lower-Tier PFICs.

 

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A U.S. Holder of a PFIC may be required to file an IRS Form 8621 on an annual basis. U.S. Holders should consult their tax advisors regarding any reporting requirements that may apply to them if Innoviz is a PFIC.

U.S. Holders are strongly encouraged to consult their tax advisors regarding the application of the PFIC rules to their particular circumstances.

Non-U.S. Holders

The section applies to Non-U.S. Holders of Innoviz ordinary shares and Innoviz warrants. For purposes of this discussion, a Non-U.S. Holder means a beneficial owner (other than a partnership or an entity or arrangement so characterized for U.S. federal income tax purposes) of Innoviz ordinary shares or Innoviz warrants that is not a U.S. Holder, including:

 

   

a nonresident alien individual, other than certain former citizens and residents of the United States;

 

   

a foreign corporation; or

 

   

a foreign estate or trust.

Non-U.S. Holders Exercising Redemption Rights with Respect to Collective Growth Common Stock

The characterization for U.S. federal income tax purposes of the redemption of a Non-U.S. Holder’s Collective Growth Common Stock generally will correspond to the U.S. federal income tax characterization of such a redemption of a U.S. Holder’s Collective Growth Common Stock, as described above. under “—U.S. Holders Exercising Redemption Rights with Respect to Collective Growth Common Stock.” Any redeeming Non- U.S. Holder will generally not be subject to U.S. federal income tax on any gain recognized as a result of the redemption or be able to utilize a loss in computing U.S. federal income tax liability unless one of the exceptions described below under “—U.S. Federal Income Tax Consequences of the Ownership and Disposition of Innoviz Ordinary Shares and Innoviz Warrants to Non-U.S. Holders” applies in respect of gain from the disposition of Collective Growth Common Stock. Moreover, redeeming Non-U.S. Holders may be subject to U.S. federal income tax on any gain recognized as a result of the redemption if Collective Growth Common Stock constitutes a U.S. real property interest by reason of Collective Growth’s status as a U.S. real property holding corporation for U.S. federal income tax purposes. Collective Growth believes that it is not and has not been at any time since its formation a U.S. real property holding corporation.

If a Non-U.S. Holder receives cash for Collective Growth Common Stock, and the redemption is treated as a corporate distribution (rather than a sale of stock under Section 302 of the Code), the Non-U.S. Holder will be subject to a 30% withholding tax (unless otherwise reduced by an applicable income tax treaty) on dividends to the extent the distribution is paid from current or accumulated earnings and profits, as determined under U.S. federal income tax principles.

U.S. Federal Income Tax Consequences of the Ownership and Disposition of Innoviz Ordinary Shares and Innoviz Warrants to Non-U.S. Holders

Any (i) distributions of cash or property paid to a Non-U.S. Holders in respect of Innoviz ordinary shares or (ii) gain realized upon the sale or other taxable disposition of Innoviz ordinary shares and/or Innoviz warrants generally will not be subject to U.S. federal income taxation unless:

 

   

the gain or distribution is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such gain is attributable); or

 

   

in the case of any gain, the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met.

Gain or distributions described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular rates. A Non-U.S. Holder that is a corporation also may be

 

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subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items.

Gain described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of the Non-U.S. Holder (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.

The U.S. federal income tax treatment of a Non-U.S. Holder’s exercise of a Company Warrant, or the lapse of a Company Warrant held by a Non-U.S. Holder, generally will correspond to the U.S. federal income tax treatment of the exercise or lapse of a warrant by a U.S. Holder, as described under “—U.S. Holders—Exercise or Lapse of a Company Warrant,” above, although to the extent a cashless exercise or lapse results in a taxable exchange, the consequences would be similar to those described in the preceding paragraphs above for a Non-U.S. Holder’s gain on the sale or other disposition of the Innoviz ordinary shares and Innoviz warrants.

Non-U.S. Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different rules.

Information Reporting and Backup Withholding

Information reporting requirements may apply to cash received in redemption of Collective Growth common stock, dividends received by U.S. Holders of Innoviz ordinary shares, and the proceeds received on the disposition of Innoviz ordinary shares effected within the United States (and, in certain cases, outside the United States), in each case other than U.S. Holders that are exempt recipients (such as corporations). Backup withholding (currently at a rate of 24%) may apply to such amounts if the U.S. Holder fails to provide an accurate taxpayer identification number (generally on an IRS Form W-9 provided to the paying agent of the U.S. Holder’s broker) or is otherwise subject to backup withholding. Any redemptions treated as dividend payments with respect to Collective Growth common stock and Innoviz ordinary shares and proceeds from the sale, exchange, redemption or other disposition of Innoviz ordinary shares may be subject to information reporting to the IRS and possible U.S. backup withholding. U.S. Holders should consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

Information returns may be filed with the IRS in connection with, and Non-U.S. Holders may be subject to backup withholding on amounts received in respect of, a Non-U.S. Holder’s disposition of Collective Growth Common Stock or warrants or their Innoviz ordinary shares, unless the Non-U.S. Holder furnishes to the applicable withholding agent the required certification as to its non-U.S. status, such as by providing a valid IRS Form W-8BEN, IRS Form W-8BEN-E or IRS Form W-8ECI, as applicable, or the Non-U.S. Holder otherwise establishes an exemption. Dividends paid with respect to Innoviz ordinary shares and proceeds from the sale of other disposition of Innoviz ordinary shares received in the United States by a Non-U.S. Holder through certain U.S.-related financial intermediaries may be subject to information reporting and backup withholding unless such Non-U.S. Holder provides proof an applicable exemption or complies with certain certification procedures described above, and otherwise complies with the applicable requirements of the backup withholding rules.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against the taxpayer’s U.S. federal income tax liability, and a taxpayer may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for a refund with the IRS and furnishing any required information.

 

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MATERIAL ISRAELI TAX CONSIDERATIONS

The following description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership and disposition of the Innoviz ordinary shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.

Israeli tax considerations

The following is a brief summary of the material Israeli tax laws applicable to Innoviz, and certain Israeli Government programs that benefit Innoviz. This section also contains a discussion of material Israeli tax consequences concerning the ownership and disposition of Innoviz ordinary shares purchased by investors. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law. Examples of such investors include residents of Israel or traders in securities who are subject to special tax regimes not covered in this discussion. To the extent that the discussion is based on new tax legislation that has not yet been subject to judicial or administrative interpretation, Innoviz cannot assure you that the appropriate tax authorities or the courts will accept the views expressed in this discussion. The discussion below is subject to change, including due to amendments under Israeli law or changes to the applicable judicial or administrative interpretations of Israeli law, which change could affect the tax consequences described below.

General corporate tax structure in Israel

Israeli companies are generally subject to corporate tax. In December 2016, the Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years) which reduces the corporate income tax rate from 25% to 24% effective from January 1, 2017, and to 23% effective from January 1, 2018. However, the effective tax rate payable by a company that derives income from an Approved Enterprise, a Preferred Enterprise, a Beneficiary Enterprise or a Technology Enterprise (as discussed below) may be considerably less. Capital gains derived by an Israeli company are generally subject to the corporate tax rate.

Law for the Encouragement of Industry (Taxes), 5729-1969

The Law for the Encouragement of Industry (Taxes), 5729-1969, generally referred to as the Industry Encouragement Law, provides several tax benefits for “Industrial Companies.” We believe that we currently qualify as an Industrial Company within the meaning of the Industry Encouragement Law.

The Industry Encouragement Law defines an “Industrial Company” as an Israeli resident-company, of which 90% or more of its income in any tax year, other than income from certain government loans, is derived from an “Industrial Enterprise” owned by it and located in Israel or in the “Area”, in accordance with the definition under section 3A of the Israeli Income Tax Ordinance (New Version) 1961, or the Ordinance. An “Industrial Enterprise” is defined as an enterprise whose principal activity in a given tax year is industrial production.

Following are the main tax benefits available to Industrial Companies:

 

   

Amortization of the cost of purchased patent, rights to use a patent, and know-how, which are used for the development or advancement of the Industrial Enterprise, over an eight-year period, commencing on the year in which such rights were first exercised;

 

   

Under limited conditions, an election to file consolidated tax returns with controlled Israeli Industrial Companies;

 

   

Expenses related to a public offering are deductible in equal amounts over three years commencing on the year of the offering.

 

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Eligibility for benefits under the Industry Encouragement Law is not contingent upon approval of any governmental authority.

Tax benefits and grants for research and development

Israeli tax law allows, under certain conditions, a tax deduction for expenditures, including capital expenditures, for the year in which they are incurred. Expenditures are deemed related to scientific research and development projects, if:

 

   

The expenditures are approved by the relevant Israeli government ministry, determined by the field of research;

 

   

The research and development must be for the promotion of the company; and

 

   

The research and development is carried out by or on behalf of the company seeking such tax deduction.

The amount of such deductible expenses is reduced by the sum of any funds received through government grants for the finance of such scientific research and development projects. No deduction under these research and development deduction rules is allowed if such deduction is related to an expense invested in an asset depreciable under the general depreciation rules of the Ordinance. Expenditures that are unqualified under the conditions above are deductible in equal amounts over three years.

From time to time we may apply to the Israel Innovation Authority for approval to allow a tax deduction for all or most of research and development expenses during the year incurred. There can be no assurance that such application will be accepted. If we will not be able to deduct research and development expenses during the year of the payment, we will be able to deduct research and development expenses during a period of three years commencing in the year of the payment of such expenses.

Law for the Encouragement of Capital Investments, 5719-1959

The Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment Law, provides certain incentives for capital investments in production facilities (or other eligible assets).

The Investment Law was significantly amended effective as of April 1, 2005 (the “2005 Amendment”), as of January 1, 2011 (the “2011 Amendment”) and as of January 1, 2017 (the “2017 Amendment”). Pursuant to the 2005 Amendment, tax benefits granted in accordance with the provisions of the Investment Law prior to its revision by the 2005 Amendment remain in force but any benefits granted subsequently are subject to the provisions of the amended Investment Law. Similarly, the 2011 Amendment introduced new benefits to replace those granted in accordance with the provisions of the Investment Law in effect prior to the 2011 Amendment. However, companies entitled to benefits under the Investment Law as in effect prior to January 1, 2011 were entitled to choose to continue to enjoy such benefits, provided that certain conditions are met, or elect instead, irrevocably, to forego such benefits and have the benefits of the 2011 Amendment apply. The 2017 Amendment introduces new benefits for Technological Enterprises, alongside the existing tax benefits.

Tax benefits under the 2011 amendment

The 2011 Amendment canceled the availability of the benefits granted to Industrial Companies under the Investment Law prior to 2011 and, instead, introduced new benefits for income generated by a “Preferred Company” through its “Preferred Enterprise” (as such terms are defined in the Investment Law) as of January 1, 2011. The definition of a Preferred Company includes a company incorporated in Israel that is not fully owned by a governmental entity, and that has, among other things, Preferred Enterprise status and is controlled and managed from Israel. Pursuant to the 2011 Amendment, a Preferred Company is entitled to a reduced corporate tax rate of 15% with respect to its income derived by its Preferred Enterprise in 2011 and 2012, unless the Preferred Enterprise is located in a specified development zone, in which case the rate will be 10%. Under the 2011 Amendment, such corporate tax rate was reduced from 15% and 10%, respectively, to 12.5% and 7%,

 

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respectively, in 2013, 16% and 9% respectively, in 2014, 2015 and 2016, and 16% and 7.5%, respectively, in 2017 and thereafter. Income derived by a Preferred Company from a “Special Preferred Enterprise” (as such term is defined in the Investment Law) would be entitled, during a benefits period of 10 years, to further reduced tax rates of 8%, or 5% if the Special Preferred Enterprise is located in a certain development zone.

Dividends distributed from income which is attributed to a “Preferred Enterprise” will be subject to withholding tax at source at the following rates: (i) Israeli resident corporations–0%, (although, if such dividends are subsequently distributed to individuals or a non-Israeli company the below rates detailed in sub sections (ii) and (iii) shall apply) (ii) Israeli resident individuals–20% (iii) non-Israeli residents (individuals and corporations)–20%, subject to a reduced tax rate under the provisions of any applicable double tax treaty (subject to the receipt in advance of a valid certificate from the Israel Tax Authority allowing for a reduced tax rate).

The 2011 Amendment also provided transitional provisions to address companies already enjoying existing tax benefits under the Investment Law. These transitional provisions provide, among other things, that unless an irrevocable request is made to apply the provisions of the Investment Law as amended in 2011 with respect to income to be derived as of January 1, 2011, a Beneficiary Enterprise can elect to continue to benefit from the benefits provided to it before the 2011 Amendment came into effect, provided that certain conditions are met.

Innoviz currently does not intend to implement the 2011 Amendment.

New tax benefits under the 2017 amendment that became effective on January 1, 2017

The 2017 Amendment was enacted as part of the Economic Efficiency Law that was published on December 29, 2016, and is effective as of January 1, 2017. The 2017 Amendment provides new tax benefits for two types of “Technology Enterprises,” as described below, and is in addition to the other existing tax beneficial programs under the Investment Law.

The 2017 Amendment provides that a technology company satisfying certain conditions will qualify as a “Preferred Technology Enterprise” and will thereby enjoy a reduced corporate tax rate of 12% on income that qualifies as “Preferred Technology Income”, as defined in the Investment Law. The tax rate is further reduced to 7.5% for a Preferred Technology Enterprise located in development zone “A”. In addition, a Preferred Technology Company will enjoy a reduced corporate tax rate of 12% on capital gain derived from the sale of certain “Benefitted Intangible Assets” (as defined in the Investment Law) to a related foreign company if the Benefitted Intangible Assets were acquired from a foreign company on or after January 1, 2017 for at least NIS 200 million, and the sale receives prior approval from the Israel Innovation Authority.

The 2017 Amendment further provides that a technology company satisfying certain conditions (group consolidated revenues of at least NIS 10 billion) will qualify as a “Special Preferred Technology Enterprise” and will thereby enjoy a reduced corporate tax rate of 6% on “Preferred Technology Income” regardless of the company’s geographic location within Israel. In addition, a Special Preferred Technology Enterprise will enjoy a reduced corporate tax rate of 6% on capital gain derived from the sale of certain “Benefitted Intangible Assets” to a related foreign company if the Benefitted Intangible Assets were either developed by the Special Preferred Enterprise or acquired from a foreign company on or after January 1, 2017, and the sale received prior approval from the Israel Innovation Authority. A Special Preferred Technology Enterprise that acquires Benefitted Intangible Assets from a foreign company for more than NIS 500 million will be eligible for these benefits for at least ten years, subject to certain approvals as specified in the Investment Law.

Dividends distributed by a Preferred Technology Enterprise or a Special Preferred Technology Enterprise, paid out of Preferred Technology Income, are generally subject to withholding tax at source at the rate of 20% or such lower rate as may be provided in an applicable tax treaty (subject to the receipt in advance of a valid certificate from the Israel Tax Authority allowing for a reduced tax rate). However, if such dividends are paid to an Israeli company, no tax is required to be withheld. If such dividends are distributed to a foreign company that holds solely or together with other foreign companies 90% or more in the Israeli company and other conditions are met, the withholding tax rate will be 4%.

 

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Innoviz believes that it may be eligible to the tax benefits under the 2017 Amendment. It should be noted that the proportion of income that may be considered Preferred Technology Income and enjoy the tax benefits described above, should be calculated according to the Nexus Formula, which is based on the proportion as that of qualifying expenditures in the IP compared to overall expenditures.

Taxation of our shareholders

Capital gains taxes applicable to non-Israeli resident shareholders.    

A non-Israeli resident that derives capital gains from the sale of shares in an Israeli resident company that were purchased after the company was listed for trading on a stock exchange outside of Israel, will be exempt from Israeli tax if the shares were not held through a permanent establishment that the non-resident maintains in Israel. However, non-Israeli corporations will not be entitled to the foregoing exemption if Israeli residents: (i) have a controlling interest more than 25% in such non-Israeli corporation or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly. In addition, such exemption is not applicable to a person whose gains from selling or otherwise disposing of the shares are deemed to be business income.

Additionally, a sale of securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty. For example, under Convention Between the Government of the United States of America and the Government of the State of Israel with respect to Taxes on Income, as amended (the “United States Israel Tax Treaty”), the sale, exchange or other disposition of shares by a shareholder who is a United States resident (for purposes of the treaty) holding the shares as a capital asset and is entitled to claim the benefits afforded to such a resident by the U.S. Israel Tax Treaty (a “U.S. Resident”) is generally exempt from Israeli capital gains tax unless: (i) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in Israel; (ii) the capital gain arising from such sale, exchange or disposition is attributed to royalties; (iii) the capital gain arising from the such sale, exchange or disposition is attributed to a permanent establishment in Israel, under certain terms; (iv) such U.S. Resident holds, directly or indirectly, shares representing 10% or more of the voting capital during any part of the 12 month period preceding the disposition, subject to certain conditions; or (v) such U.S. Resident is an individual and was present in Israel for 183 days or more during the relevant taxable year.

In some instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration may be subject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding at source at the time of sale (i.e., resident certificate or other documentation).

Capital gains taxes applicable to Israeli resident shareholders.

An Israeli resident corporation that derives capital gains from the sale of shares in an Israeli resident company that were purchased after the company was listed for trading on a stock exchange outside of Israel will generally be subject to tax on the real capital gains generated on such sale at the corporate tax rate of 23%. An Israeli resident individual will generally be subject to capital gain tax at the rate of 25%. However, if the individual shareholder claims deduction of interest expenditures or is a “substantial shareholder” at the time of the sale or at any time during the preceding twelve months period, such gain will be taxed at the rate of 30%. A “substantial shareholder” is generally a person who alone or together with such person’s relative or another person who collaborates with such person on a permanent basis, holds, directly or indirectly, at least 10% of any of the “means of control” of the corporation. “Means of control” generally include the right to vote, receive profits, nominate a director or an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid rights how to act, regardless of the source of such right. Individual holders dealing in securities in Israel for whom the income from the sale of securities is considered “business income” as defined in section 2(1) of the Israeli Tax Ordinance are taxed at the marginal tax rates applicable to business income (up to 47% in 2020). Certain Israeli institutions who are exempt from tax under section 9(2) or section 129(C)(a)(1) of the Israeli Tax Ordinance (such as exempt trust fund, pension fund) may be exempt from capital gains tax from the sale of the shares.

 

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Taxation of Israeli shareholders on receipt of dividends.

An Israeli resident individual is generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares at the rate of 25%. With respect to a person who is a “substantial shareholder” at the time of receiving the dividend or on any time during the preceding twelve months, the applicable tax rate is 30%. Such dividends are generally subject to Israeli withholding tax at a rate of 25% if the shares are registered with a nominee company (whether the recipient is a substantial shareholder or not), 15% if the dividend is distributed from income attributed to an Approved Enterprise or a Beneficiary Enterprise and 20% if the dividend is distributed from income attributed to a Preferred Enterprise. If the recipient of the dividend is an Israeli resident corporation such dividend income will be exempt from tax provided the income from which such dividend is distributed was derived or accrued within Israel and was received directly or indirectly from another corporation that is liable to Israeli corporate tax. An exempt trust fund, pension fund or other entity that is exempt from tax under section 9(2) or section 129(C)(a)(1) of the Israeli Tax Ordinance is exempt from tax on dividend.

Taxation of non-Israeli shareholders on receipt of dividends.    

Non-Israeli residents (either individuals or corporations) are generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares at the rate of 25%, which tax will be withheld at source, unless relief is provided in a treaty between Israel and the shareholder’s country of residence. With respect to a person who is a “substantial shareholder” at the time of receiving the dividend or on any time during the preceding twelve months, the applicable tax rate is 30%. Such dividends are generally subject to Israeli withholding tax at a rate of 25% if the shares are registered with a nominee company (whether the recipient is a substantial shareholder or not), 15% if the dividend is distributed from income attributed to an Approved Enterprise or a Beneficiary Enterprise and 20% if the dividend is distributed from income attributed to a Preferred Enterprise, unless a reduced rate is provided under an applicable tax treaty (subject to the receipt in advance of a valid certificate from the Israel Tax Authority allowing for a reduced tax rate). For example, under the United States-Israel Tax Treaty, the maximum rate of tax withheld at source in Israel on dividends paid to a holder of our ordinary shares who is a U.S. Resident is 25%. However, the maximum rate of withholding tax on dividends, not generated by a Preferred Enterprise or Beneficiary Enterprise, that are paid to a United States corporation holding 10% or more of the outstanding voting capital throughout the tax year in which the dividend is distributed as well as during the previous tax year, is 12.5%, provided that not more than 25% of the gross income for such preceding year consists of certain types of dividends and interest. Notwithstanding the foregoing, dividends distributed from income attributed to an Approved Enterprise, Beneficiary Enterprise or Preferred Enterprise are not entitled to such reduced rate under the tax treaty but are subject to a withholding tax rate of 15% for a shareholder that is a U.S. corporation, provided that the condition related to our gross income for the previous year (as set forth in the previous sentence) is met. If the dividend is attributable partly to income derived from an Approved Enterprise, Benefited Enterprise or Preferred Enterprise, and partly to other sources of income, the withholding rate will be a blended rate reflecting the relative portions of the two types of income. We cannot assure you that we will designate the profits that we may distribute in a way that will reduce shareholders’ tax liability. Application for the reduced tax rate requires appropriate documentation presented and specific instruction received from the Israeli Tax Authorities to the extent tax is withheld at source at the maximum rates (see above), a qualified tax treaty recipient will be required to comply with certain administrative procedures with the Israeli Tax Authorities in order to receive a refund of the excess tax withheld.

A foreign resident receiving dividend income from an Israeli company, from which the full tax was deducted, will generally be exempt from filing a tax return in Israel, unless he is liable to additional Surtax (see below) in accordance with section 121B of the Ordinance.

Surtax.

Subject to the provisions of an applicable tax treaty, individuals who are subject to tax in Israel are also subject to an additional tax at a rate of 3% on annual income (including, but not limited to, dividends, interest and capital gain) exceeding NIS 647,640 for 2021, which amount is linked to the annual change in the Israeli consumer price index.

 

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Estate and Gift Tax

Israeli law presently does not impose estate or gift taxes.

 

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INFORMATION ABOUT THE COMPANIES

Collective Growth Corporation

Collective Growth Corporation was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. Collective Growth was incorporated under the laws of the State of Delaware on December 10, 2019.

On May 5, 2020, Collective Growth closed its initial public offering of 15,000,000 units, with each unit consisting of one share of Class A Stock and one-half of one redeemable warrant, with each whole warrant entitling the holder to purchase one share of Class A Stock at a price of $11.50 commencing 30 days after the consummation of an initial business combination. The units from Collective Growth’s initial public offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $150,000,000. Simultaneously with the consummation of its initial public offering, Collective Growth consummated the private sale of 262,500 private units at a price of $10.00 per unit and 1,875,000 private warrants at $1.00 per warrant generating gross proceeds of $4,500,000. A total of $150,000,000 was deposited into the trust account and the remaining proceeds, net of underwriting discounts and commissions and other costs and expenses, became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. Collective Growth’s initial public offering was conducted pursuant to a registration statement on Form S-1 (Registration No. 333-236798) that became effective on April 30, 2020. As of the record date, there was approximately $150,111,500 held in the Trust Account.

Collective Growth’s units, the Class A Stock and the Collective Growth warrants are listed on the Nasdaq Capital Market under the symbols CGROU, CGRO and CGROW, respectively.

The mailing address of Collective Growth’s principal executive office is 1805 West Avenue, Austin, Texas 78701, and its telephone number is (613) 799-1110. After the consummation of the Business Combination, Collective Growth’s principal executive office will be that of Innoviz.

Innoviz Technologies Ltd.

Innoviz is a leading provider of high-performance, solid-state LiDAR and perception solutions that bring enhanced vision and superior performance to enable safe autonomous driving at a mass scale. We believe that Innoviz provides a complete and comprehensive solution for OEMs and Tier-1 partners that are developing and marketing autonomous driving vehicles to the passenger car and other relevant markets, such as robotaxis, shuttles and trucking. Innoviz’s unique LiDAR and perception solutions, which feature technological breakthroughs across core components, have propelled Innoviz to the first Level 3 LiDAR Automotive series production contract in its industry. In addition, Innoviz’s solutions can enable safe autonomy for other industries, including drones, robotics and mapping.

Innoviz was founded in 2016 by veterans of Unit 81, the elite technology unit of Israel’s Intelligence Corps, one of the most prestigious multidisciplinary technological units in the Israeli Defense Forces. From its founding, Innoviz’s culture drew from Unit 81’s core values of solving sophisticated technological problems through creativity and agile thinking in order to address the needs of autonomous vehicles in a manner that strikes the desired balance between performance and cost. Innoviz created a new type of LiDAR sensor from the chip-level up, including a suite of powerful and sophisticated software applications for high-performance computer vision to allow superior perception. Innoviz’s multidisciplinary team developed an operational MEMS-based (Micro-Electro Mechanical System) LiDAR prototype in less than a year, which then attracted the attention of leading Tier-1 companies such as Magna and Aptiv already in 2017. This was followed by a rigorous further development and qualification stage, culminating in Innoviz achieving a design win with BMW in 2018 to power BMW’s Level 3 autonomous platform. BMW is a leader and a pioneer in deploying new technologies into the automotive industry and it is the first OEM worldwide to incorporate a LiDAR for a Level 3 autonomous driving configuration in mass commercialization program. Innoviz therefore believes that its close cooperation with

 

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BMW and its Tier-1 partner Magna uniquely positions Innoviz to make Level 3 autonomous driving a commercial reality.

The mailing address of Innoviz’s principal executive office is 2 Amal Street, Afek Industrial Park, Rosh HaAin, Israel 4809202 and its telephone number is +972-74-700-3692.

Hatzata Merger Sub, Inc.

Hatzata Merger Sub, Inc. (“Merger Sub”) is a newly formed Delaware corporation and a wholly owned subsidiary of Innoviz. Merger Sub was formed solely for the purpose of effecting the proposed Business Combination with Collective Growth and has not carried on any activities other than in connection with the proposed Business Combination. The address and telephone number for Merger Sub’s principal executive offices are the same as those for Innoviz.

 

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COLLECTIVE GROWTH’S BUSINESS

Introduction

Collective Growth was incorporated on December 10, 2019 for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. Collective Growth’s efforts to identify a prospective target business were not limited to any particular industry or geographic region, although it initially focused its search for target businesses on companies operating in the federally permissible cannabinoid industry. Prior to executing the Business Combination Agreement, Collective Growth’s efforts were limited to organizational activities, completion of its initial public offering and the evaluation of possible business combinations.

Initial Public Offering and Simultaneous Private Placement

On May 5, 2020, Collective Growth consummated its initial public offering of 15,000,000 units. The units sold in the initial public offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $150,000,000. Cantor Fitzgerald & Co. acted as sole book-running manager. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-236798). The SEC declared the registration statement effective on April 30, 2020.

Simultaneously with the consummation of its initial public offering, Collective Growth consummated the private placement of an aggregate of 262,500 units at a price of $10.00 per private placement unit, and 1,875,000 warrants at a price of $1.00 per private placement warrant, generating total proceed of $4,500,000. The issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

The private placement units and private placement warrants are identical to the units and warrants underlying the units sold in the Collective Growth IPO, except that the private placement warrants are not transferable, assignable or salable until 30 days after the completion of a business combination, subject to certain limited exceptions.

Of the gross proceeds received from the initial public offering, and the sale of private securities, $150,000,000 was placed in Collective Growth’s trust account.

Collective Growth may withdraw from the trust account interest earned on the funds held therein necessary to pay its income taxes, if any. Except as described in the prospectus for Collective Growth’s initial public offering and described in the subsection below entitled “Collective Growth’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” these proceeds will not be released until the earlier of the completion of an initial business combination and Collective Growth’s redemption of 100% of the outstanding public shares upon its failure to consummate a business combination within the required time period.

The remaining proceeds from Collective Growth’s initial public offering and simultaneous private placement, net of underwriting discounts and commissions and other costs and expenses, became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses.

Fair Market Value of Target Business

The target business or businesses that Collective Growth acquires must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (excluding the amount of deferred underwriting commissions held in trust and taxes payable) at the time of the execution of a definitive agreement for its initial business combination, although Collective Growth may acquire a target business whose fair market value significantly exceeds 80% of the trust account balance. Collective Growth’s board of directors determined that this test was met in connection with the proposed business combination with Innoviz as described in the section entitled “Proposal One—The Business Combination Proposal—Satisfaction of 80% Test” above.

 

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Stockholder Approval of Business Combination

Under the SPAC Charter, Collective Growth must seek stockholder approval of an initial business combination at a meeting called for such purpose at which public stockholders may seek to have their public shares converted into cash, regardless of whether they vote for or against the proposed business combination or do not vote at all, subject to the limitations described in the prospectus for Collective Growth’s initial public offering. Accordingly, in connection with the Business Combination, the Collective Growth public stockholders may seek to have their public shares converted to cash in accordance with the procedures set forth in this proxy statement/prospectus. See “Special Meeting of Collective Growth Stockholders—Conversion Rights.”

Voting in Connection with the Stockholder Meeting

In connection with any vote for a proposed business combination, including the vote with respect to the business combination proposal, Collective Growth’s stockholders prior to its initial public offering and its officers and directors have each agreed to vote their Collective Growth shares in favor of such proposed Business Combination.

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding Collective Growth or its securities, the Collective Growth initial stockholders, its officers and directors, Innoviz shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the business combination proposal, or execute agreements to purchase such shares from them in the future, or they may enter into transactions with such persons and others to provide them with incentives to acquire common stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirement that the holders of a majority of the shares entitled to vote at the special meeting to approve the business combination proposal vote in its favor and that the conditions to the closing of the Business Combination otherwise will be met, where it appears that such requirements or conditions would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, include arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares for nominal value.

Entering into any such arrangements may have a depressive effect on the shares of Collective Growth Common Stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the special meeting.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the business combination proposal and the other proposals to be presented at the special meeting and would likely increase the chances that such proposals would be approved. Moreover, any such purchases may make it more likely that the conditions to the closing of the Business Combination are met.

No agreements dealing with the above arrangements or purchases have been entered into as of the date of this proxy statement/prospectus. Collective Growth will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the business combination proposal or the satisfaction of any closing conditions. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

Liquidation if No Business Combination

Under the SPAC Charter, if Collective Growth does not complete the Business Combination with Innoviz or another initial business combination by November 5, 2021 (or such later date as may be approved by Collective

 

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Growth stockholders in an amendment to the SPAC charter), Collective Growth 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 100% of the outstanding public shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Collective Growth’s remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to Collective Growth’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. At such time, the Collective Growth warrants will expire. Holders of warrants will receive nothing upon a liquidation and the warrants will be worthless.

Each of the initial stockholders of Collective Growth and its officers and directors has agreed to waive its rights to participate in any distribution from Collective Growth’s trust account or other assets with respect to the shares held by them prior to Collective Growth’s initial public offering. There will be no distribution from the trust account with respect to Collective Growth’s warrants, which will expire worthless if Collective Growth is liquidated.

The proceeds deposited in the trust account could, however, become subject to the claims of Collective Growth’s creditors which would be prior to the claims of the Collective Growth public stockholders. Although Collective Growth has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses Collective Growth has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, and although Collective Growth will seek such waivers from vendors it engages in the future, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the trust account notwithstanding such agreements. The Sponsor has agreed that it will be liable under certain circumstances to pay debts and obligations to target businesses or vendors or other entities that are owed money by Collective Growth for services rendered or contracted for or products sold to it, but Collective Growth cannot ensure that the Sponsor will be able to satisfy its indemnification obligations if it is required to do so. Additionally there are two exceptions to the Sponsor’s indemnity: the Sponsor will have no liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with Collective Growth waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or (2) as to any claims under the indemnity with the underwriters of Collective Growth’s initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, the Sponsor will not be liable to the Collective Growth public stockholders and instead will only have liability to Collective Growth. Furthermore, the Sponsor may not be able to satisfy its indemnification obligations if it is required to as the Sponsor’s only assets are securities of Collective Growth and Collective Growth has not taken any further steps to ensure that the Sponsor will be able to satisfy any indemnification obligations that arise. Accordingly, the actual per-share redemption price could be less than approximately $10.00, plus interest, due to claims of creditors. Additionally, if Collective Growth is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in Collective Growth’s bankruptcy estate and subject to the claims of third parties with priority over the claims of Collective Growth’s stockholders. To the extent any bankruptcy claims deplete the trust account, Collective Growth cannot assure you it will be able to return to the Collective Growth public stockholders at least approximately $10.00 per share. Collective Growth’s public stockholders are entitled to receive funds from the trust account only in the event of its failure to complete a business combination within the required time period or if the stockholders properly seek to have Collective Growth redeem their respective shares for cash upon a business combination which is actually completed by Collective Growth. In no other circumstances does a stockholder have any right or interest of any kind to or in the trust account.

If Collective Growth is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor, creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Collective Growth’s stockholders. Because Collective Growth intends to distribute the proceeds held in the trust account to its public stockholders promptly

 

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after the expiration of the time period to complete a business combination, this may be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to access to or distributions from its assets. Furthermore, by paying public stockholders from the trust account prior to addressing the claims of creditors, Collective Growth’s board of directors may be viewed as having breached their fiduciary duties to Collective Growth’s creditors and/or may be viewed as having acted in bad faith, which may subject Collective Growth and Innoviz to claims of punitive damages. Collective Growth cannot assure you that such claims will not be brought against it.

Collective Growth will pay the costs of any subsequent liquidation from its remaining assets outside of the trust account plus the up to $100,000 of interest earned on the funds in the trust account that Collective Growth may use for liquidation and dissolution expenses.

Employees

Collective Growth has four executive officers. These individuals are not obligated to devote any specific number of hours to Collective Growth’s matters and intend to devote only as much time as they deem necessary to its affairs. Collective Growth does not intend to have any full time employees prior to the closing of the Business Combination.

Facilities

Upon the closing of the Business Combination, the principal executive offices of Collective Growth will be those of Innoviz.

Directors and Executive Officers

Collective Growth’s current directors and executive officers are as follows:

 

Name

   Age     

Position

Bruce Linton

     54      Chairman and Chief Executive Officer

Geoffrey W. Whaling

     61      President

Tim Saunders

     60      Chief Financial Officer

Wilson Kello

     45      Chief Marketing Officer

Andrew Townsend

     26      Director

Jonathan Sherman

     31      Director

Yevgeny Neginsky

     42      Director

Eugene Dozortsev

     35      Director

Bruce Linton has served as Collective Growth’s Chairman of the Board and Chief Executive Officer since January 2020. Mr. Linton has extensive experience as a public company executive in the cannabis industry. Mr. Linton is Founder and served as the Chairman and Chief Executive Officer of Canopy Growth Corporation, a leading diversified cannabis, hemp and cannabis device company that was the first cannabis producing company in North America to be listed on a major stock exchange, from December 2012 to July 2019. As Chairman and Chief Executive Officer of Canopy Growth Corporation, Mr. Linton led the company through over 13 rounds of financing, 31 acquisitions and $5 billion of capital raises, including a $4 billion investment by Constellation Brands. He has also been Executive Chairman of Gage Cannabis Co. since September 2019, Co-Chairman of Martello Technologies Group since 2018, Co-Founder of and Investor in Ruckify Inc. since 2015, and Executive Chairman of Vireo Health International, Inc. from November 2019 to June 2020. Mr. Linton previously held positions that include Chief Executive Officer of Martello Technologies Group (2013 to 2017), Chief Executive Officer and President of Clearford Industries Canada Inc. (2005 to 2008, 2009 to 2013), General Manager at Computerland.ca (2001 to 2005), President and Co-Founder of webHancer Corp (1999 to 2001), part of the establishing team at CrossKeys Systems Corporation (1992 to 1999), and Government Liaison at Newbridge Networks Corp. He was also formerly a director of Sitebrand Inc. In December 2010, while Mr. Linton was a director of Sitebrand, its wholly-owned subsidiary, Sitebrand.com Inc., filed a Notice of Intention to make a

 

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proposal to its creditors and obtained protection from its creditors under the provisions of the Bankruptcy and Insolvency Act. In February 2011 Sitebrand.com Inc. made an assignment in bankruptcy under the provisions of the Bankruptcy and Insolvency Act. While Mr. Linton was a director of Sitebrand, Sitebrand was subject to a cease trade order issued by the Ontario Securities Commission on April 4, 2011 and the British Columbia Securities Commission on April 7, 2011 for failure to file required audited annual financial statements and interim financial statements in the prescribed time. The cease trade order was revoked on August 5, 2011. Mr. Linton received a Bachelor’s Degree from Carleton University.

Geoffrey W. Whaling has served as Collective Growth’s President since January 2020. Mr. Whaling has worked with more than 18 states, various stakeholder groups, the White House, Congress and members of their staff to pass federal legislation legalizing hemp as a commodity crop and removing it from the Controlled Substances Act. Since September 2017, Mr. Whaling has served as Chair and President of the National Hemp Association, a hemp advocacy group. He has also served as the President of the Pennsylvania Hemp Industry Council since February 2016. From October 2018 to November 2019, Mr. Whaling was co-Founder and President of HIP Developments LLC, a division of Canopy Growth USA and also served as strategic advisor to Canopy Growth Corporation from 2018 until November 2019. From January 2015 to October 2018, Mr. Whaling served as Founder and Chairman of AgriNEXTusa, a hemp consultancy/advocacy group. From 2005 to 2009, Mr. Whaling was Chairman and Chief Executive Officer of North American Motorsport Events, a motorsport business founded by Mr. Whaling.

Tim Saunders FCPA, FCA, ICD.D has served as Collective Growth’s Chief Financial Officer since January 2020. Mr. Saunders is a finance executive with approximately 35 years of international experience in public companies and private equity-backed start-up companies. Since August 2013, Mr. Saunders has been President of Black Canvas Consulting Inc., a consulting firm. From June 2015 to May 2019, Mr. Saunders served as Executive Vice President and Chief Financial Officer of Canopy Growth Corporation and served as a strategic advisor until November 2019. From November 2006 to August 2013, Mr. Saunders served as Vice President, Finance and Chief Financial Officer of Plasco Energy Group Inc., a pre-revenue private waste conversion and energy generation company. Approximately 18 months after Mr. Saunders’s departure from Plasco Energy Group, the company failed to secure additional financing and filed for Canada’s Companies’ Creditors Arrangement, which is equivalent to a Chapter 11 bankruptcy in the United States. Prior to this, Mr. Saunders held executive finance positions at Mitel Corporation, Telesystem International / Vodafone and Zarlink Semiconductor Inc., among others. He received a Bachelor of Business Administration from Bishop’s University in Quebec. He also earned an executive certificate from Ivey School of Business at Western University. He is a Fellow of the Chartered Professional Accountants Institute of Canada and is a holder of the Institute of Corporate Directors Director designation (ICD.D).

Wilson Kello has served as our Chief Marketing Officer since January 2020. Mr. Kello has approximately 17 years of creative consulting experience, including acting as creative consultant for cannabis companies including Canopy Growth Corporation and others. Since 2008, Mr. Kello has been the Creative Director of International Intimates, Inc., an apparel manufacturer. From 2006 to 2008, Mr. Kello served as Creative Director for Hustler Lingerie. From 2001 to 2005, he founded and served as Director of SAME Clothing, a graphic and apparel design company. Prior to this, he served as Packaging Designer for Ferranti & Schiumo. Mr. Kello received a B.A. (High Honors) from Swarthmore College.

Andrew Townsend has served as a member of Collective Growth’s board of directors since its inception. Mr. Townsend has extensive capital markets experience, having founded and managed multiple partnerships focusing on public and private market transactions. Mr. Townsend built his career around his expertise in special situation investments, including structured financings and distressed transactions. Mr. Townsend is the Founder and Managing Member of Ocelot Capital Management, LLC, a private investment firm founded in May 2018. His role at Ocelot Capital Management includes sourcing, structuring, negotiating, and executing portfolio investments. Mr. Townsend has served on the board of directors of American Natural Energy Corporation since 2019. Prior to founding Ocelot Capital Management, Mr. Townsend managed a private hedge fund for Galapagos Partners from 2015 to 2018. Mr. Townsend is a Chartered Financial Analyst (CFA) Charterholder and a

 

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Chartered Alternative Investment Analyst (CAIA) Charterholder. Mr. Townsend is a graduate of the McCombs School of Business at the University of Texas at Austin with a Master of Science in Finance and holds a Bachelor of Arts in Economics.

Jonathan Sherman has served as a member of Collective Growth’s board of directors since January 2020. Mr. Sherman has been a partner in the Business Law Group and Securities Group at Cassels Brock & Blackwell LLP since 2019. Mr. Sherman is also co-chair of the firm’s Cannabis Group. Mr. Sherman’s practice has an emphasis on mergers and acquisitions and corporate finance transactions. He also regularly advises clients on a broad range of corporate, commercial and securities law matters and routinely acts on behalf of a wide variety of cannabis industry participants. Outside of the cannabis industry, Mr. Sherman has advised on transactions in a variety of other industries, including natural resources, real estate, gaming, and other emerging industries such as blockchain and cryptocurrency. Mr. Sherman is a member of the Law Society of Ontario, received a Bachelor of Commerce degree from McGill University and is a graduate of Osgoode Hall Law School.

Yevgeny Neginsky has served as a member of Collective Growth’s board of directors since February 2020. Mr. Neginsky has been the portfolio manager of Springdale Capital LLC, an absolute return focused investment firm, since he founded it in 2009. Prior to founding Springdale Capital, Mr. Neginsky was part of the investment team at Tyndall Management, LLC, a value-oriented investment firm, from 2005 to 2009, where he evaluated investment opportunities across various industries. Previously, Mr. Neginsky worked as an equity analyst at T. Rowe Price (2004) and Horsley Bridge Partners (from 2001 to 2003). Mr. Neginsky received his MBA from The Tuck School of Business at Dartmouth and a Bachelor of Arts, Summa Cum Laude, from Dartmouth College with a High Honors distinction in Economics.

Eugene Dozortsev has served as a member of Collective Growth’s board of directors since February 2020. Mr. Dozortsev has been a managing member of Newtyn Management, LLC, an investment firm, since he co-founded it in July 2011. Previously, he was a Senior Analyst at Tyndall Management from October 2003 to 2011. He received a B.S. in Finance from NYU Stern School of Business.

Legal Proceedings

There is no material litigation, arbitration, governmental proceeding or any other legal proceeding currently pending or known to be contemplated against Collective Growth, and Collective Growth has not been subject to any such proceeding in the 10 years preceding the date of this proxy statement/prospectus.

Periodic Reporting and Audited Financial Statements

Collective Growth has registered its securities under the Exchange Act and has reporting obligations, including the requirement to file annual and quarterly reports with the SEC. Collective Growth has filed with the SEC its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020.

 

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INNOVIZ’S BUSINESS

Company Overview

Innoviz is a leading provider of high-performance, solid-state LiDAR and perception solutions that bring enhanced vision and superior performance to enable safe autonomous driving at a mass scale. We believe that Innoviz provides a complete and comprehensive solution for OEMs and Tier-1 partners that are developing and marketing autonomous driving vehicles to the passenger car and other relevant markets, such as robotaxis, shuttles and trucking. Innoviz’s unique LiDAR and perception solutions, which feature technological breakthroughs across core components, have propelled Innoviz to the first Level 3 LiDAR Automotive series production contract in its industry. In addition, Innoviz’s solutions can enable safe autonomy for other industries, including drones, robotics and mapping.

Innoviz was founded in 2016 by veterans of Unit 81, the elite technology unit of Israel’s Intelligence Corps, one of the most prestigious multidisciplinary technological units in the Israeli Defense Forces. From its founding, Innoviz’s culture drew from Unit 81’s core values of solving sophisticated technological problems through creativity and agile thinking in order to address the needs of autonomous vehicles in a manner that strikes the desired balance between performance and cost. Innoviz created a new type of LiDAR sensor from the chip-level up, including a suite of powerful and sophisticated software applications for high-performance computer vision to allow superior perception. Innoviz’s multidisciplinary team developed an operational MEMS-based (Micro-Electro Mechanical System) LiDAR prototype in less than a year, which then attracted the attention of leading Tier-1 companies such as Magna and Aptiv already in 2017. This was followed by a rigorous further development and qualification stage, culminating in Innoviz achieving a design win with BMW in 2018 to power BMW’s Level 3 autonomous platform. BMW is a leader and a pioneer in deploying new technologies into the automotive industry and it is the first OEM worldwide to incorporate a LiDAR for a Level 3 autonomous driving configuration in a mass commercialization program. Innoviz therefore believes that its close cooperation with BMW and its Tier-1 partner Magna uniquely positions Innoviz to make Level 3 autonomous driving a commercial reality.

The intense sustained cooperation with BMW, both prior to and following the design win, provides Innoviz’s engineers and other R&D personnel with a valuable competitive edge. These engineers and other R&D personnel have been meticulously trained to design, operate and verify Innoviz’s many groundbreaking inventions in accordance and in compliance with the rigorous ISO26262 standard for Automotive Components, as well as the functional safety automotive industry standards. Compliance with these standards has been enforced by regular ongoing audits of Innoviz and its key suppliers by both Magna and BMW. As a result, Innoviz’s products have been constructed from the bottom up with hardware and software technology that meets rigorous automotive safety, quality, environmental, manufacturing and other standards.

Innoviz’s innovation has produced LiDAR solutions that deliver market leading performance and that meet the demanding safety requirements for Level 2+ through Level 5 autonomous vehicles at price points suitable for mass production passenger vehicles. Innoviz’s integrated custom design of advanced hardware and software components, which leverage the multidisciplinary expertise and experience of the Innoviz team, enable it to provide turn-key autonomous solutions to accelerate widespread adoption across automakers at serial production scale.

Innoviz’s robust software suite enables its ~905nm wavelength LiDAR laser-based architecture to be easily leveraged to provide compelling solutions for Level 2+ through Level 5 without the need for any new significant hardware components. This means that Innoviz is positioned to penetrate the current market, which is characterized mainly by Level 2+ production, and to continue to capture and extend its market share through a software-based upgrade of its products to Level 3 and above as the market continues to mature.

The compelling nature of Innoviz’s approach and solution is demonstrated by its agreements with four