As filed with the Securities and Exchange Commission on June 7, 2021.

Registration No. 333-254070

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

________________________

AMENDMENT NO. 2 TO
FORM F
-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

________________________

REE AUTOMOTIVE LTD.
(Exact Name of Registrant as Specified in Its Charter)

________________________

Israel

 

7374

 

Not Applicable

(State or Other Jurisdiction of
Incorporation or Organization)

 

(Primary Standard Industrial
Classification Code Number)

 

(I.R.S. Employer
Identification Number)

10 Aharon Maskin Street
Tel
-Aviv, Israel
+972 0778995193

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

________________________

Puglisi & Associates
850 Library Avenue,
Newark, Delaware 19711

(Name, address, including zip code, and telephone number, including area code, of agent for service)

________________________

Copies to:

Colin J. Diamond
Tali Sealman
Maia Gez
White & Case LLP
1221 Avenue of the Americas
New York, New York 10020
Tel: (212) 819
-8200

 

Mimi Zemah
Kfir Zaga
Zemah Schneider & Partners
18 Raul Wallenberg St.
Building D, 3
rd Floor
Tel Aviv 6971915, Israel
Tel: (+972) (3) 768
-4300

 

Aaron M. Lampert
Goldfarb Seligman & Co.
Ampa Tower
98 Yigal Alon Street
Tel Aviv 6789141, Israel
Tel: (+972) (3) 608
-9999

 

Sean M. Donahue
Jeffrey A. Letalien
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue NW
Washington, DC 20004
Tel: (202) 739
-3000

 

Chaim Friedland
Timor Belan
Ari Fried
Gornitzky & Co.,
Advocates and
Notaries Vitania
Tel
-Aviv Tower 20
Haharash St
Tel Aviv 6761310, Israel
Tel: (+972) (3) 710
-9191

________________________

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this registration statement and all other conditions to the proposed Merger described herein have been satisfied or waived.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act

____________

†         The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

__________________________

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

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The information in this proxy statement/prospectus is not complete and may be changed. We may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY COPY — SUBJECT TO COMPLETION, DATED JUNE 7, 2021

PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
OF
10X CAPITAL VENTURE ACQUISITION CORP

and

PROSPECTUS FOR UP TO 28,056,250 ORDINARY SHARES, 15,562,500 WARRANTS AND 15,562,500
ORDINARY SHARES ISSUABLE UPON EXERCISE OF WARRANTS
OF
REE AUTOMOTIVE LTD.

________________________

10X Capital Venture Acquisition Corp, a Delaware corporation (“10X Capital”), has unanimously approved the Agreement and Plan of Merger, dated as of February 3, 2021 (the “Merger Agreement”), by and among REE Automotive Ltd., a company organized under the laws of Israel (“REE”), Spark Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of REE (“Merger Sub”), and 10X Capital, which provides for, among other things, the merger of Merger Sub with and into 10X Capital, with 10X Capital surviving as a wholly-owned subsidiary of REE, and with the securityholders of 10X Capital becoming securityholders of REE (the Merger and the other transactions contemplated by the Merger Agreement, the “Merger”).

Pursuant to the Merger Agreement, immediately prior to the effective time of the Merger (the “Effective Time”), (i) each preferred share, par value NIS 0.01 each, of REE (each, a “REE Preferred Share”) will be converted into REE Class A ordinary shares, without par value (“REE Class A Ordinary Shares”), in accordance with REE’s organizational documents and (ii) immediately following such conversion but prior to the Effective Time, REE will effect a stock split of each REE Class A Ordinary Share into such number of REE Class A Ordinary Shares calculated in accordance with the terms of the Merger Agreement such that each REE Class A Ordinary Share will have a value of $10.00 per share after giving effect to such stock split (the “Stock Split” and, together with the conversion of REE Preferred Shares, the “Capital Restructuring”).

As a result of the Merger, immediately prior to the Effective Time, each outstanding share of Class B common stock, par value $0.0001 per share, of 10X Capital (“10X Capital Class B Common Stock”) will convert into shares of Class A common stock, par value $0.0001 per share, of 10X Capital (“10X Capital Class A Common Stock”) and, immediately thereafter, at the Effective Time of the Merger, each outstanding share of 10X Capital Class A Common Stock will be converted into the right to receive one newly issued REE Class A Ordinary Share. 10X Capital’s amended and restated certificate of incorporation (the “Existing 10X Capital Charter”) provides that, upon conversion of 10X Capital Class B Common Stock into 10X Capital Class A Common Stock, the holders of 10X Capital Class B Common Stock shall be entitled to receive a number of additional shares (the “Anti-Dilution Shares”) of 10X Capital Class A Common Stock equal to 25% of the number of shares of 10X Capital Class A Common Stock issued to the PIPE Investors (as defined below). Concurrently with the execution and delivery of the Merger Agreement, 10X Capital, its executive officers and directors (the “Insiders”), 10X Capital SPAC Sponsor I LLC (the “Sponsor”) and REE entered into a SPAC Letter Agreement (the “Letter Agreement”). Pursuant to the Letter Agreement, the holders of 10X Capital Class B Common Stock have agreed to waive their right to receive any Anti-Dilution Shares in excess of 2,900,000 shares of 10X Capital Class A Common Stock (the “Conversion Ratio Adjustment”), with such waiver resulting in a conversion ratio of 1.5763975 shares of 10X Capital Class B Common Stock for each share of 10X Capital Class A Common Stock (the “Conversion Ratio”). In addition, up to 1,500,000 of the 2,900,000 Anti-Dilution Shares to be received upon the conversion of 10X Capital Class B Common Stock will be subject to subsequent forfeiture without consideration if trading prices of REE Class A Ordinary Shares specified in the Letter Agreement are not achieved following the Merger. At the Effective Time of the Merger, each of 10X Capital’s outstanding warrants to purchase one share of 10X Capital Class A Common Stock (the “10X Capital Warrants”) shall be converted into the right to receive an equal number of warrants to purchase one REE Class A Ordinary Share (the “REE Warrants”), subject to downward adjustment to the next whole number in case of fractions of REE Warrants.

REE’s ordinary shares will be divided into two classes. The REE Class A Ordinary Shares will each have one vote per share. The REE Class B ordinary shares, without par value (the “REE Class B Ordinary Shares”), will each have 10 votes per share. All of the REE Class B Ordinary Shares will initially be held by the founders of REE (the “Founders”) who will each have up to approximately 39% of the voting power and collectively have up to approximately 78% of the voting power of REE following the Merger. The REE Class B Ordinary Shares will be suspended and have no further voting rights with respect to any Founder who: (i) holds less than 33% of the REE Class A Ordinary Shares held by such Founder immediately following the Effective Time (including those underlying vested and unvested options); (ii) whose employment as an executive officer is terminated other than for cause or who resigns as an officer of REE and also ceases to serve as a director; (iii) who dies or is permanently disabled, except that if the other Founder holds REE Class B Ordinary Shares at such time, then the REE Class B Ordinary Shares held by the Founder who dies or is permanently disabled will automatically be transferred to the other Founder; or (iv) whose employment as an executive officer is terminated for cause. A termination for cause requires a unanimous decision of the board of directors of REE other than the affected Founder. In addition, all of the REE Class B Ordinary Shares will automatically be suspended upon transfer to a non-permitted transferee or the tenth anniversary of the closing of the Merger (the “Closing”).

 

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The registration statement of which this proxy statement/prospectus is a part covers the REE Class A Ordinary Shares and REE Warrants issuable to the securityholders of 10X Capital as described above. Accordingly, we are registering up to an aggregate of 28,056,250 REE Class A Ordinary Shares, 15,562,500 REE warrants, and 15,562,500 REE Class A Ordinary Shares issuable upon the exercise of the warrants. We are not registering the REE Class A Ordinary Shares and REE Warrants issued or issuable to the existing REE securityholders or the PIPE Investors.

Proposals to approve the Merger Agreement and the other matters discussed in this proxy statement/prospectus will be presented at the Special Meeting of 10X Capital securityholders scheduled to be held on             , 2021 in virtual format.

Although REE 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 Merger, REE will become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). REE intends to apply for listing of the REE Class A Ordinary Shares and REE Warrants on Nasdaq under the proposed symbols “REE” and “REEAW,” respectively, to be effective at the consummation of the Merger. It is a condition of the consummation of the Merger that the REE Class A 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 Merger, there can be no assurance that REE’s securities will be listed on Nasdaq or that a viable and active trading market will develop. See “Risk Factors” beginning on page 33 for more information.

REE 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.

REE 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, REE’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, REE 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 10X Capital stockholders with detailed information about the Merger and other matters to be considered at the Special Meeting of 10X Capital. 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 33 of the accompanying proxy statement/prospectus.

None of the Securities and Exchange Commission, any state securities commission or the Israel Securities Authority has approved or disapproved of the securities to be issued in connection with the Merger, 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               , 2021, and is first being mailed to 10X Capital stockholders on or about         , 2021.

 

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10X CAPITAL VENTURE ACQUISITION CORP
1 World Trade Center, 85
th Floor
New York, NY 10007

NOTICE OF SPECIAL MEETING
IN LIEU OF 2021 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
          , 2021

TO THE STOCKHOLDERS OF 10X CAPITAL VENTURE ACQUISITION CORP:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of 10X Capital Venture Acquisition Corp, a Delaware corporation (“10X Capital”), will be held virtually at           Eastern time, on             , 2021, accessible at            or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed (the “Special Meeting”). You are cordially invited to attend the Special Meeting, which will be held for the following purposes:

(1)    to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of February 3, 2021 (the “Merger Agreement”), and to approve the Merger contemplated by such agreement (the “Merger”), by and among REE Automotive Ltd., a company organized under the laws of Israel (“REE”), Spark Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of REE (“Merger Sub”), and 10X Capital, which provides for, among other things, the merger of Merger Sub with and into 10X Capital, with 10X Capital surviving as a wholly-owned subsidiary of REE (the Merger and the other transactions contemplated by the Merger Agreement, the “Transactions”). In connection with the Merger, REE will list as a publicly-traded company on Nasdaq and will continue to conduct the automotive technology business conducted by REE prior to the Merger. We refer to this proposal as the “Merger Proposal” and a copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A;

(2)    to consider and vote upon a proposal to amend 10X Capital’s amended and restated certificate of incorporation (the “Existing 10X Capital Charter”) by adopting the second amended and restated certificate of incorporation (the “Proposed 10X Capital Charter”), which will provide that, immediately prior to the consummation of the Merger, all shares of 10X Capital Class B Common Stock (as defined herein) will automatically convert into shares of 10X Capital Class A Common Stock (as defined herein) with an amended Conversion Ratio adjustment — we refer to this proposal as the “Class B Charter Proposal”;

(3)    to consider and vote upon a proposal to approve the material differences between the Existing 10X Capital Charter and REE’s articles of association to be in effect following the Merger (the “Amended and Restated Articles”) — we refer to this proposal as the “Material Differences Charter Proposal”; and

(4)    to consider and vote upon a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, 10X Capital is not authorized to consummate the Merger — we refer to this proposal as the “Adjournment Proposal.”

These items of business are described in the attached proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of Class A common stock, par value $0.0001 per share, of 10X Capital (“10X Capital Class A Common Stock”) and Class B common stock, par value $0.0001 per share, of 10X Capital (“10X Capital Class B Common Stock” and collectively with 10X Capital Class A Common Stock, “10X Capital Common Stock”) at the close of business on June 2, 2021, 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, the 10X Capital board of directors has determined that the Merger Proposal, the Class B Charter Proposal, the Material Differences Charter Proposal and the Adjournment Proposal are advisable and fair to and in the best interest of 10X Capital and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the Merger Proposal, “FOR” the Class B Charter Proposal, “FOR” the Material Differences Charter Proposal and “FOR” the Adjournment Proposal, if presented.

The Merger is conditioned on the approval of each of the Merger Proposal, the Class B Charter Proposal and the Material Differences Charter Proposal (the “Condition Precedent Proposals”) at the Special Meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned

 

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upon the approval of any other proposal. Each of these proposals is more fully described in the accompanying proxy statement, which each stockholder is encouraged to read carefully and in its entirety. If the Merger Proposal is not approved by 10X Capital’s stockholders, the Merger will not be consummated.

All of 10X Capital’s stockholders are cordially invited to attend the Special Meeting virtually. 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 stockholder of record of 10X Capital Common Stock, you may also cast your vote virtually at the Special Meeting. If your shares are 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 and vote in person, you must obtain a proxy from your broker or bank. If you do not vote or do not instruct your broker or bank how to vote, it will have the same effect as voting against the Merger Proposal, the Class B Charter Proposal, and the Material Differences Charter Proposal, but will have no effect on the Adjournment Proposal.

A complete list of 10X Capital stockholders of record entitled to vote at the Special Meeting will be available for ten (10) days before the Special Meeting at the principal executive offices of 10X Capital for inspection by stockholders during ordinary 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 or not, please 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 or bank to ensure that votes related to the shares you beneficially own are properly counted. The Merger is conditioned on the approval of each of the Condition Precedent Proposals at the Special Meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal. Each of the proposals is more fully described in the accompanying proxy statement, which each stockholder is encouraged to read carefully and in its entirety.

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

This proxy statement/prospectus is dated,             , 2021 and is first being mailed to 10X Capital stockholders on or about         , 2021.

By Order of the Board of Directors

/s/ Hans Thomas

   

Hans Thomas

   

Chief Executive Officer and Chairman of the Board

   

New York, New York

        , 2021

 

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Page

ABOUT THIS PROXY STATEMENT/PROSPECTUS

 

1

EXCHANGE RATE PRESENTATION

 

1

INDUSTRY AND MARKET DATA

 

1

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

 

1

FREQUENTLY USED TERMS

 

2

SUMMARY OF THE MATERIAL TERMS OF THE MERGER

 

6

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

 

8

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

 

20

UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA OF 10X CAPITAL AND REE

 

30

RISK FACTORS

 

33

FORWARD-LOOKING STATEMENTS

 

78

SPECIAL MEETING OF 10X CAPITAL STOCKHOLDERS

 

80

PROPOSAL NO. 1 — THE MERGER PROPOSAL

 

84

PROPOSAL NO. 2 — THE Class b charter PROPOSAL

 

99

PROPOSAL NO. 3 — THE material differences charter PROPOSAL

 

100

PROPOSAL NO. 4 — THE ADJOURNMENT PROPOSAL

 

102

THE MERGER AGREEMENT

 

103

AGREEMENTS ENTERED INTO IN CONNECTION WITH THE MERGER AGREEMENT

 

114

CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

 

116

CERTAIN MATERIAL ISRAELI TAX CONSIDERATIONS

 

132

INFORMATION ABOUT THE COMPANIES

 

138

10X CAPITAL BUSINESS

 

139

REE’S BUSINESS

 

146

SELECTED HISTORICAL FINANCIAL DATA OF 10X CAPITAL

 

160

10X CAPITAL’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

161

SELECTED HISTORICAL FINANCIAL DATA OF REE

 

165

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

 

166

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

179

MANAGEMENT OF REE FOLLOWING THE MERGER

 

194

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

 

214

DESCRIPTION OF REE WARRANTS

 

219

DESCRIPTION OF REE ORDINARY SHARES

 

223

COMPARISON OF RIGHTS OF REE SHAREHOLDERS AND 10X CAPITAL STOCKHOLDERS

 

234

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF REE

 

241

APPRAISAL RIGHTS

 

244

ANNUAL MEETING STOCKHOLDER PROPOSALS

 

244

OTHER STOCKHOLDER COMMUNICATIONS

 

244

LEGAL MATTERS

 

244

EXPERTS

 

244

DELIVERY OF DOCUMENTS TO STOCKHOLDERS

 

245

ENFORCEABILITY OF CIVIL LIABILITY

 

246

WHERE YOU CAN FIND MORE INFORMATION

 

247

INDEX TO FINANCIAL STATEMENTS

 

F-1

INFORMATION NOT REQUIRED IN PROSPECTUS

 

II-1

i

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by REE, constitutes a prospectus of REE under Section 5 of the U.S. Securities Act of 1933, as amended (the “Securities Act”), with respect to the REE Class A Ordinary Shares to be issued to 10X Capital stockholders, the REE Warrants to be issued to holders of 10X Capital Warrants and the REE Class A Ordinary Shares underlying the REE Warrants, if the Merger described herein is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the Special Meeting of 10X Capital stockholders at which 10X Capital stockholders will be asked to consider and vote upon a proposal to approve the Merger by the adoption of the Merger Agreement, among other matters.

Unless otherwise indicated or the context otherwise requires, all references in this proxy statement/prospectus to the terms “REE” and the “Company” refer to REE Automotive Ltd., together with its subsidiaries. All references in this proxy statement/prospectus to “10X Capital” refer to 10X Capital Venture Acquisition Corp.

EXCHANGE RATE PRESENTATION

Certain amounts described herein have been expressed in U.S. dollars for convenience and, when expressed in U.S. dollars in the future, such amounts may be different from those set forth herein due to intervening exchange rate fluctuations.

INDUSTRY AND MARKET DATA

In this proxy statement/prospectus, we present industry data, information and statistics regarding the markets in which REE competes as well as publicly available information, industry and general publications and research and studies conducted by third parties. This information is supplemented where necessary with REE’s own internal estimates and information obtained from discussions with its customers, taking into account publicly available information about other industry participants and REE’s management’s judgment where information is not publicly available. This information appears in “Summary of the Proxy Statement/Prospectus,” “REE’s Management’s Discussion and Analysis of Financial Condition and Results of Operation,” “Information About the Companies — REE’s Business” and other sections of this proxy statement/prospectus.

Industry publications, research, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this proxy statement/prospectus. These forecasts and forward-looking information are subject to uncertainty and risk due to a variety of factors, including those described under “Risk Factors.” These and other factors could cause results to differ materially from those expressed in any forecasts or estimates.

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

10X Capital, Merger Sub and REE own or have rights to trademarks, trade names and service marks that they use in connection with the operation of their businesses. In addition, their names, logos and website names and addresses are their trademarks or service marks. Other trademarks, trade names and service marks appearing in this proxy statement/prospectus are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this proxy statement/prospectus are listed without the applicable ®, and SM symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service marks.

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FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, the term “REE” refers to REE Automotive Ltd., a company organized under the laws of Israel, the term “10X Capital” refers to 10X Capital Venture Acquisition Corp, a Delaware corporation, and “Merger Sub” refers to Spark Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of REE.

In addition, in this document:

“10X Capital Class A Common Stock” means 10X Capital’s Class A common stock, par value $0.0001 per share.

“10X Capital Class B Common Stock” means 10X Capital’s Class B common stock, par value $0.0001 per share.

“10X Capital Common Stock” means shares of 10X Capital Class A Common Stock and 10X Capital Class B Common Stock.

“10X Capital Warrant” means a warrant to purchase one share of 10X Capital Class A Common Stock at a price of $11.50 per share, which may be either a Public Warrant or a Private Warrant.

“Adjournment Proposal” means the proposal to adjourn the Special Meeting of the stockholders of 10X Capital to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Merger Proposal.

“Amended and Restated Articles” means the amended and restated articles of association of REE, to be effective upon consummation of the Merger.

“Anti-Dilution Shares” means a number of additional 10X Capital Class A Common Stock, to be received by the holders of 10X Capital Class B Common Stock upon conversion of 10X Capital Class B Common Stock into 10X Capital Class A Common Stock, equal to 25% of the number of shares of 10X Capital Class A Common Stock issued to the PIPE Investors.

“Broker Non-Vote” means the failure of a 10X Capital stockholder, who holds his or her shares in “street name” through a broker or other nominee, to give voting instructions to such broker or other nominee.

“Class B Charter Proposal” means the proposal to amend the Existing 10X Capital Charter to provide for the conversion of all shares of 10X Capital Class B Common Stock into 10X Capital Class A Common Stock in accordance with the Conversion Ratio immediately prior to the consummation of the Merger.

“Closing” means the closing of the transactions contemplated by the Merger Agreement and the PIPE Subscription Agreements, and “Closing Date” means the date on which the Closing is completed.

“Code” means the Internal Revenue Code of 1986, as amended.

“Conversion Ratio” means a ratio of 1.5763975, at which, immediately prior to the Effective Time, each share of 10X Capital Class B Common Stock shall convert into 1.5763975 shares of 10X Capital Class A Common Stock.

“Conversion Ratio Adjustment” means the waiver by the holders of the shares of 10X Capital Class B Common Stock to receive any Anti-Dilution Shares in excess of 2,900,000.

“DGCL” means the Delaware General Corporation Law.

“DTC” means The Depository Trust Company.

“Effective Time” means the effective time of the Merger pursuant to the Merger Agreement.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Existing 10X Capital Charter” means 10X Capital’s amended and restated certificate of incorporation.

“First Trading Day” means the first day on which REE Class A Ordinary Shares trade on Nasdaq following the Merger.

“First Trading Day Price” means the volume weighted average price at which the registered REE Class A Ordinary Shares trade during the course of the First Trading Day.

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“Founders” means Daniel Barel and Ahishay Sardes, the founders of REE.

“Insiders” means the executive officers and directors of 10X Capital.

“Investors’ Rights Agreement” means the Investors’ Rights Agreement, by and among REE, 10X Capital, the Sponsor, the Insiders, and certain REE shareholders, pursuant to which REE has agreed to grant the other parties thereto registration rights in respect of their REE Class A Ordinary Shares and certain other REE securities, and whereby the Sponsor, certain shareholders of REE and the Founders, have each agreed, subject to the terms in the Investors’ Rights Agreement, to certain limitations on transferring their REE Ordinary Shares.

“IPO” means the initial public offering of Units of 10X Capital, consummated on November 27, 2020.

“Letter Agreement” means the Letter Agreement, by and between 10X Capital, the Insiders, the Sponsor and REE, pursuant to which, the Sponsor has agreed to waive its rights to receive certain Anti-Dilution Shares in excess of 2,900,000, and has agreed to forfeit and surrender up to 1,500,000 shares of 10X Capital Class A Common Stock if certain trading prices of REE Class A Ordinary Shares are not achieved following the Merger.

“MaaS” means Mobility-as-a-Service.

“Material Differences Charter Proposal” means the proposal to approve the material differences between the Existing 10X Capital Charter and the Amended and Restated Articles to be in effect following the Merger.

“Maximum Redemption Scenario” means that all 10X Capital Public Stockholders holding approximately 19,019,200 Public Shares will exercise their redemption rights for the $190.20 million of funds in 10X Capital Corporation’s Trust Account. Each of REE’s and 10X Capital’s obligations under the Merger Agreement are subject to 10X Capital having (i) at least $225 million (the “Minimum Cash Amount”) and (ii) net tangible assets of at least $5.0 million either immediately prior to or upon consummation of the Merger.

“Merger” means the merger of Merger Sub with and into 10X Capital, with 10X Capital surviving the merger and becoming a wholly-owned subsidiary of REE, along with the other transactions contemplated by the Merger Agreement.

“Merger Agreement” means the Agreement and Plan of Merger, dated as of February 3, 2021, by and among 10X Capital, REE and Merger Sub, as such agreement may be amended or otherwise modified from time to time in accordance with its terms.

“Merger Proposal” means the proposal to adopt the Merger Agreement and approve the transactions contemplated thereby.

“Nasdaq” means the Nasdaq Stock Market.

“No Redemption Scenario” means no holder of Public Shares elects to have such shares redeemed in connection with the Merger.

“PIPE Investment” means the purchases of PIPE Shares pursuant to subscription agreements with the PIPE Investors, such purchases to be consummated immediately prior to the consummation of the Merger.

“PIPE Investors” means certain institutional accredited investors.

“PIPE Shares” means 30,000,000 shares of 10X Capital Class A Common Stock subscribed for and to be purchased by the PIPE Investors pursuant to the PIPE Subscription Agreements.

“PIPE Subscription Agreements” means the subscription agreements entered into by the PIPE Investors, pursuant to which the PIPE Investors have committed to subscribe for and purchase the PIPE Shares at a purchase price per share of $10.00.

“Private Warrants” means the 10X Capital Warrants sold to the Sponsor in a private placement in connection with the IPO.

“Prospectus” means the prospectus included in the Registration Statements on Form S-1 (Registration No. 333-249072) filed with the SEC in connection with the IPO.

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“Public Shares” means shares of 10X Capital Class A Common Stock issued as part of the Units sold in the IPO.

“Public Stockholders” means the holders of Public Shares of 10X Capital.

“Public Warrants” means 10X Capital Warrants included in Units sold in the IPO.

“Redemption” means 10X Capital’s acquisition of Public Shares in connection with the Merger pursuant to the right of the holders of Public Shares to have their shares redeemed in accordance with the procedures set forth in this proxy statement/prospectus.

“REE Class A Ordinary Shares” means the Class A ordinary shares, without par value, of REE, having one vote per share.

“REE Class B Ordinary Shares” means the Class B ordinary shares, without par value, of REE, having 10 votes per share.

“REE Ordinary Shares” means the REE Class A Ordinary Shares together with the REE Class B Ordinary Shares.

“REE Preferred Shares” means the REE preferred share, par value NIS 0.01 each, of REE, which will be converted into REE Class A Ordinary Shares in accordance with REE’s organizational documents immediately prior to the Effective Time.

“REE Warrants” means warrants that will entitle the holder thereof to purchase for $11.50 per share one REE Class A Ordinary Share in lieu of one share of 10X Capital Class A Common Stock.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Special Meeting” means the Special Meeting of the stockholders of 10X Capital, to be held virtually on         , 2021 at         . Eastern time, accessible at          or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed.

“Sponsor” means 10X Capital SPAC Sponsor LLC, a Delaware limited liability company, an initial stockholder of 10X Capital and the sole holder of 10X Capital Class B Common Stock.

“Sponsor Shares” means shares of 10X Capital Class B Common Stock, 5,031,250 of which are currently outstanding and were issued to the Sponsor prior to the IPO, which shall convert into 7,931,250 shares of 10X Capital Class A Common Stock immediately prior to the Merger based on the Conversion Ratio.

“Stock Split” means a stock split by REE to cause the value of the outstanding REE Class A Ordinary Shares immediately prior to the Effective Time to equal $10.00 per share.

“Support Agreement” means the Support Agreement pursuant to which 10X Capital, and the Sponsor have agreed, among other things, to vote their shares of 10X Capital (representing 20% of such outstanding shares), and take certain other actions, in support of the Merger, and REE and the REE shareholders party thereto have agreed, among other things, to vote their shares of REE (representing approximately 95% of such outstanding shares and, together with other shares of REE subject to proxy agreements, representing approximately 99%), and take certain other actions, in support of the Merger.

“TCO” means total cost of ownership.

“Trading Day” means any day on which the REE Class A Ordinary Shares are actually traded on the principal securities exchange or securities market on which REE Class A Ordinary Shares are then traded.

“Transaction” or “Transactions” means the transactions contemplated by the Merger Agreement and the PIPE Subscription Agreements to occur at or immediately prior to the Closing, including the Merger.

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“Trust Account” means the trust account that holds a portion of the proceeds of the IPO and the concurrent sale of the Private Warrants.

“Units” means Units issued in the IPO, each consisting of one share of 10X Capital Class A Common Stock and one-half of one Public Warrant.

“UK” means the United Kingdom.

“U.S.” means the United States of America.

“U.S. dollar,” “USD,” “US$” and “$” mean the legal currency of the United States.

“U.S. GAAP” means generally accepted accounting principles in the United States.

“Warrant Agreement” means that certain Warrant Agreement, dated as of November 23, 2020, between 10X Capital and Continental Stock Transfer & Trust Company.

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SUMMARY OF THE MATERIAL TERMS OF THE MERGER

The descriptions below of the material terms of the Merger are intended to be summaries of such terms. Such descriptions do not purport to be complete and are qualified in their entirety by reference to the terms of the agreements themselves.

The parties to the Merger Agreement are 10X Capital, REE and Merger Sub. Pursuant to the Merger Agreement, Merger Sub, a wholly-owned subsidiary of REE, will merge with and into 10X Capital, with 10X Capital being the surviving corporation and a direct, wholly-owned subsidiary of REE, and with the stockholders of 10X Capital becoming stockholders of REE.

Upon consummation of the Merger, including the PIPE Investment, REE will become a publicly traded company.

As consideration for the Merger, at the Effective Time of the Merger, each outstanding share of 10X Capital Class A Common Stock will be converted into the right to receive one newly issued REE Class A Ordinary Share. The Existing 10X Capital Charter provides that, upon conversion of 10X Capital Class B Common Stock into 10X Capital Class A Common Stock, the holders of 10X Capital Class B Common Stock shall be entitled to receive a number of additional Anti-Dilution Shares of 10X Capital Class A Common Stock equal to 25% of the number of shares of 10X Capital Class A Common Stock issued to the PIPE Investors. Concurrently with the execution and delivery of the Merger Agreement, 10X Capital, its Insiders, the Sponsor and REE entered into the Letter Agreement. Pursuant to the Letter Agreement, the holders of the shares of 10X Capital Class B Common Stock have agreed to waive their right to receive any Anti-Dilution Shares in excess of 2,900,000, with such waiver resulting in the Conversion Ratio. In addition, up to 1,500,000 of the 2,900,000 Anti-Dilution Shares to be received upon the conversion of 10X Capital Class B Common Stock will be subject to subsequent forfeiture without consideration if the trading prices of REE Class A Ordinary Shares specified in the Letter Agreement are not achieved following the Merger. 10X Capital’s outstanding warrants to purchase one share of 10X Capital Class A Common Stock shall be converted into the right to receive an equal number of warrants to purchase one REE Class A Ordinary Share, subject to downward adjustment to the next whole number in case of fractions of REE Warrants.

Under the Merger Agreement, upon the consummation of the Merger, (a)  each of the 20,125,000 outstanding Public Shares of 10X Capital’s Class A Common Stock (excluding shares that are redeemed) will become one REE Class A Ordinary Share, except that the holders of Public Shares shall be entitled to elect instead to have such shares redeemed and receive a pro rata portion of 10X Capital’s Trust Account, as provided in Existing 10X Capital Charter, and (b) each of the 7,931,250 Sponsor Shares of 10X Capital’s Class A Common Stock, representing the number of Sponsor Shares held in 10X Capital after the Conversion Ratio is applied, will become one REE Class A Ordinary Share. Additionally, each outstanding 10X Capital Warrant will automatically become a REE Warrant that entitles the holder to purchase one REE Class A Ordinary Share in lieu of one share of 10X Capital Class A Common Stock.

In connection with the consummation of the Merger, the following will occur:

•        immediately prior to Effective Time, REE intends to effect a stock split to cause the value of the outstanding REE Class A Ordinary Shares immediately prior to the Effective Time to equal $10.00 per share. Additionally, immediately prior to the Effective Time, (i) each issued and outstanding unit of 10X Capital comprising one share of 10X Capital Class A Common Stock and one-half of one warrant to purchase one share of 10X Capital Class A Common Stock, shall be automatically separated and the holder thereof shall be deemed to hold one share of 10X Capital Class A Common Stock and one-half of one 10X Capital Warrant; and (ii) each outstanding share of 10X Capital Class B common stock shall convert into 1.5763975 shares of 10X Capital Class A Common Stock.

•        the PIPE Investors have subscribed for and will purchase 30,000,000 shares of 10X Capital Class A Common Stock for $10.00 per share and an aggregate purchase price of $300.0 million; and

•        prior to the Effective Time, the shareholders of REE will amend REE’s Amended and Restated Articles to be substantially in the form attached hereto as Annex B.

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The Merger Agreement may be terminated under certain customary and limited circumstances at any time prior the Closing, including, among other reasons:

•        by mutual written consent of 10X Capital and REE;

•        by either 10X Capital or REE if the closing of the Merger contemplated in the Merger Agreement has not occurred by August 15, 2021 (the “Outside Date”), except that the right to so terminate the Merger Agreement will not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Merger to occur on or before such date and such action or failure to act constitutes a material breach of the Merger Agreement;

•        by either 10X Capital or REE if a governmental entity has issued an order or decree or has taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger which order, decree or other action is final and nonappealable;

•        by REE if 10X Capital has breached any of its covenants or representations and warranties in any material respect and has not cured such breach within the time periods provided for in the Merger Agreement (subject to a 30-day cure period);

•        by 10X Capital if REE has breached any of its covenants or representations and warranties in any material respect and has not cured such breach within the time periods provided for in the Merger Agreement (subject to a 30-day cure period);

•        by either 10X Capital or REE, if, at the Special Meeting (including any adjournments thereof), the Merger Agreement, the Merger, and the other transaction proposals contemplated by the Merger Agreement are not duly adopted by 10X Capital’s stockholders by the requisite vote under applicable legal requirements and 10X Capital’s organizational documents;

•        by either 10X Capital or REE, if, at the meeting of REE’s shareholders held to approve the Merger (including any adjournments thereof), the Merger Agreement, the Merger, and the other transaction proposals contemplated by the Merger Agreement are not duly adopted by REE’s shareholders by the requisite vote under applicable legal requirements and REE’s organizational documents;

•        by REE, if, prior to receipt of approval of the stockholders of 10X Capital, the board of directors of 10X Capital changes its recommendation with respect to the Merger, as permitted by the Merger Agreement;

•        by 10X Capital, if the REE shareholders necessary to approve the Merger, the Merger Agreement, and the transactions contemplated thereby have not executed the Support Agreement within 45 days following the signing of the Merger Agreement; or

•        by either 10X Capital or REE, if, at the Closing, the condition that 10X Capital shall have at least $225,000,000 in cash and cash equivalents at the time of the Closing is incapable of being satisfied at the Closing.

At the consummation of the Merger, the current directors of REE will remain as directors, and Ahishay Sardes, Co-Founder and Chief Technology Officer of REE, and Hans Thomas, Chief Executive Officer and Chairman of 10X Capital, will each become a director of REE.

Upon completion of the Merger, the current officers of REE will remain officers of REE, holding equivalent positions to those held by them with REE prior to the Merger. See the section entitled “Management of REE Following the Merger.”

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

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

 

A. 10X Capital and REE have agreed to a merger under the terms of the Merger Agreement that is described in this proxy statement/prospectus. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A and 10X Capital encourages its stockholders to read it in its entirety. 10X Capital’s stockholders are being asked to consider and vote upon a proposal to approve the Merger Agreement, which, among other things, provides for Merger Sub to be merged with and into 10X Capital with 10X Capital being the surviving corporation in the Merger and becoming a wholly-owned subsidiary of REE, and the other transactions contemplated by the Merger Agreement. See “Proposal No. 1 — The Merger Proposal.

Q. What is being voted on at the Special Meeting?

 

A. 10X Capital’s stockholders are being asked to vote to adopt (i) a proposal to approve the Merger Agreement and the transactions contemplated thereby, (ii) a proposal to amend the Existing 10X Capital Charter to provide for the conversion of 10X Capital Class B Common Stock into 10X Capital Class A Common Stock at the Conversion Ratio, which reflects a partial waiver by the Sponsor of its right under the Existing 10X Capital Charter to receive Anti-Dilution Shares, immediately prior to the Merger and (iii) a proposal to approve the material differences between the Existing 10X Capital Charter and the Amended and Restated Articles to be in effect following the Merger. See the sections entitled “Proposal No. 1 — The Merger Proposal,“Proposal No. 2 — Class B Charter Proposal,” and “Proposal No. 3 — Material Differences Charter Proposal.”

   

The stockholders may also be asked to consider and vote upon a proposal to adjourn the meeting to a later date or dates to permit further solicitation and voting of proxies if, based upon the tabulated vote at the time of the Special Meeting, 10X Capital would not have been authorized to consummate the Merger. See the section entitled “Proposal No. 4 — The Adjournment Proposal.”

   

10X Capital 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 Merger and the other matters to be acted upon at the Special Meeting. Stockholders should read it carefully.

   

The vote of stockholders is important. Stockholders are encouraged to submit their completed proxy card as soon as possible after carefully reviewing this proxy statement/prospectus.

Q. Why is 10X Capital proposing the Merger?

 

A. 10X Capital was organized to effect a merger, capital stock exchange, asset acquisition or other transaction similar to the Merger with one or more businesses or entities.

10X Capital completed its IPO of Units on November 27, 2020, with each Unit consisting of one share of its 10X Capital Class A Common Stock and one-half of one Public Warrant, concurrently with a private placement of 5,500,000 Private Warrants. Each whole 10X Capital Warrant entitles the holder to purchase one share of 10X Capital Class A Common Stock at a price of $11.50. On December 18, 2020, the underwriters exercised in full their over-allotment option to purchase 2,625,000 Units, raising total gross proceeds of $206,750,000. Since the IPO, 10X Capital’s activity has been limited to the evaluation of Merger candidates.

REE is a development stage technology company in the field of electric mobility that aims to reinvent the electric vehicle (“EV”) and next-generation e-mobility market. REE has developed the next generation EV platform which is completely flat, scalable and modular, providing customers full design freedom to create the broadest range of EV and autonomous vehicles for current and future applications. Based on 10X Capital’s due diligence investigations of REE and the industry in which it operates, including the financial and other information provided by REE in the course of their negotiations, 10X Capital believes that REE has an appealing growth profile and a compelling valuation. As a result, 10X Capital believes that a merger with REE will provide 10X Capital stockholders with an opportunity to participate in a company with significant growth potential. See the section entitled “Proposal No. 1 — The Merger Proposal — The 10X Capital Board of Directors’ Reasons for the Merger.”

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Q. What will happen to 10X Capital’s securities upon consummation of the Merger?

 

A. The 10X Capital’s Units, the 10X Capital Class A Stock and the 10X Capital Warrants are currently listed on Nasdaq under the symbols “VCVCU,” “VCVC” and “VCVCW,” respectively. 10X Capital’s securities will cease trading following the consummation of the Merger. REE intends to apply for listing of the REE Class A Ordinary Shares and REE Warrants on Nasdaq under the proposed symbols “REE” and “REEAW,” respectively, to be effective upon consummation of the Merger. While trading on Nasdaq is expected to begin on the first business day following the consummation of the Merger, there can be no assurance that REE’s securities will be listed on Nasdaq or that a viable and active trading market will develop. See “Risk Factors — Risks Related to the Merger” for more information.

Q. What will happen in the Merger?

 

A. At the Closing, Merger Sub will merge with and into 10X Capital, with 10X Capital surviving as a wholly-owned subsidiary of REE. In addition, immediately prior to the Effective Time, (i) all outstanding 10X Capital Class B Common Stock will be converted into 10X Capital Class A Common Stock, (ii) all outstanding 10X Capital Class A Common Stock will be converted into shares of REE Class A Ordinary Shares, (iii) and all outstanding warrants to purchase shares of 10X Capital Class A Common Stock will be converted into the right to receive an equal number of warrants to purchase one REE Class A Ordinary Share. In particular, assuming the No Redemption Scenario (a) all outstanding shares of 10X Capital Class A Common Stock, consisting of (i) 20,125,000 Public Shares, (ii) 7,931,250 Sponsor Shares after being adjusted pursuant to the Conversion Ratio, and (iii) 30,000,000 shares subscribed for in the PIPE Investment, will be converted into REE Class A Ordinary Shares on a one-for-one basis, and (b) each outstanding 10X Capital Warrant will become one REE Warrant that will entitle the holder thereof to purchase one REE Share in lieu of one share of 10X Capital Class A Common Stock, subject to downward adjustment for each faction of a warrant.

Q. Are the proposals conditioned on one another?

 

Yes. The Merger is conditioned on the approval of each of the Condition Precedent Proposals at the Special Meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal.

Q. What will be the relative equity stakes of 10X Capital’s public stockholders, the Sponsor, the PIPE Investors and REE’s existing shareholders in REE upon completion of the Merger?

 

A. Upon consummation of the Merger, REE will become a new public company and 10X Capital will become a wholly-owned subsidiary of REE. The former security holders of 10X Capital and the PIPE Investors will all become security holders of REE.

Upon consummation of the Merger, the post-Closing share ownership of REE Class A Ordinary Shares would be as follows:

     

REE Class A
Ordinary
Shares(1)(4) (%)
Assuming No Redemption

 

REE Class A
Ordinary
Shares(1)(4) (%)
Assuming Maximum Redemption

10X Capital public stockholders

 

20,125,000 (5.5

)%

 

4,167,131 (1.2

)%

Sponsor(2)

 

7,931,250 (2.2

)%

 

7,931,250 (2.3

)%

PIPE Investors

 

30,000,000 (8.2

)%

 

30,000,000 (8.6

)%

Issued and outstanding REE shares as of December 31, 2020

 

176,104,148 (48.4

)%

 

176,104,148 (50.6

)%

Total as of December 31, 2020

 

234,160,398

 

 

218,202,529

 

REE’s options and warrants

 

120,393,599 (33.1

)%

 

120,393,599 (34.6

)%

REE’s shares issued subsequent to December 31, 2020

 

9,655,539 (2.6

)%

 

9,655,539 (2.8

)%

Total as of May 14, 2021 on a fully diluted basis

 

364,209,536 (100

)%

 

348,251,667 (100

)%

 

__________

(1)     Excludes all 15,562,500 10X Capital Warrants.

(2)     Includes 2,900,000 Anti-Dilution Shares and assumes no forfeiture of any portion of such shares.

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(3)     The value of REE Class A Ordinary Shares is reflected at $10 per share, assumes the exercise of all options and warrants and the consummation of the expected Stock Split immediately prior to the Effective Time assuming a forward stock split ratio of 1:26.71, based on the Conversion Ratio as defined in the Merger Agreement. The split and the number of shares are calculated based on the number of REE’s shares as of May 14, 2021. The forward stock split ratio is an estimate and is subject to change.

(4)     New REE Class B Ordinary Shares will be issued to the Founders, which will carry 10 votes per share, thereby granting each Founder up to approximately 39% of the voting power and the Founders collectively up to approximately 78% of the voting power of REE following the Merger (under the No Redemption Scenario). As these shares have no economic or participating rights, they have been excluded from the calculation of earnings per share.

The REE Class B Ordinary Shares issued to each of the Founders will have no rights to participate in any distribution of proceeds by REE (including upon any dividend distribution, distribution upon a liquidation of REE or any other distribution event). The only rights that are attached to the REE Class B Ordinary Shares issued to each of the Founders are the right to 10 votes per share.

Each Founder’s economic rights/interests will be represented via REE Class A Ordinary Shares that will be held by such Founder (including REE Class A Ordinary Shares underlying options of such Founder). Each Founder will initially hold an equal amount of REE Class A Ordinary Shares (including REE Class A Ordinary Shares underlying options of such Founder) as such Founder holds in REE Class B Ordinary Shares.

Pursuant to the Existing 10X Capital Charter, in connection with the completion of the Merger and assuming they cast a vote on the Merger Proposal, 10X Capital’s public stockholders may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the Existing 10X Capital Charter. Payment for such redemptions will come from the Trust Account. To the extent 10X Capital’s public stockholders elect to have their shares redeemed, the consideration to be paid will vary as described herein.

Q. What are the material differences in the rights of stockholders as a result of the dual class structure?

 

The REE Class B Ordinary Shares will have 10 votes per share, while the REE Class A Ordinary Shares have one vote per share. In addition, the REE Class B Ordinary Shares do not have any economic rights.

Subject to limited exceptions, REE Class B Ordinary Shares may be (1) issued only to, and registered in the names of, our Founders, Daniel Barel and Ahishay Sardes, and (2) transferred by one Founder to the other Founder.

Each REE Class B Ordinary Share will be automatically suspended upon the tenth anniversary of the Closing. In addition, the REE Class B Ordinary Shares will be suspended and have no further voting rights with respect to any Founder: (i) who holds less than 33% of the REE Class A Ordinary Shares held by such Founder immediately following the Effective Time (including those underlying vested and unvested options); (ii) whose employment as an executive officer is terminated other than for cause or who resigns as an officer of REE and also ceases to serve as a director; (iii) who dies or is permanently disabled, except that if the other Founder holds REE Class B Ordinary Shares at such time, then the REE Class B Ordinary Shares held by the Founder who dies or is permanently disabled will automatically be transferred to the other Founder; or (iv) whose employment as an executive officer is terminated for cause.

Although no single holder will control a majority of voting power, the holders of the REE Class B Ordinary Shares will collectively have up to (approximately) 78% of the voting power of REE following the Merger (under the No Redemption Scenario) and will collectively be able to control matters submitted to its stockholders for approval, including the election of directors, amendments of its organizational documents and any merger, consolidation, sale of all or substantially all of its assets or other major corporate transactions.

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Q. What are the U.S. Federal income tax consequences of the Merger to U.S. holders of 10X Capital Common Stock and/or Public Warrants?

 

A. As described more fully under the section entitled “Certain Material U.S. Federal Income Tax Considerations — U.S. Holders — U.S. Federal Income Tax Considerations of the Merger,” the parties to the Merger intend that the Merger qualify as a tax-deferred reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) to U.S. Holders (as defined below) of 10X Capital Common Stock and/or 10X Capital Warrants.

   

Section 367(a) of the Code and the Treasury regulations promulgated thereunder, in certain circumstances, may impose additional requirements for certain U.S. Holders to qualify for such tax-deferred treatment with respect to the exchange of 10X Capital Common Stock and/or 10X Capital Warrants in the Merger.

   

The tax consequences of the Merger are complex and will depend on your particular circumstances. For a more detailed discussion of the U.S. federal income tax considerations of the Merger for U.S. Holders of 10X Capital Common Stock and/or 10X Capital Warrants, including the application of Section 367(a) of the Code, see the section entitled “Certain Material U.S. Federal Income Tax Considerations — U.S. Holders — U.S. Federal Income Tax Considerations of the Merger.” If you are a U.S. Holder whose 10X Capital Common Stock and/or 10X Capital Warrants are exchanged in the Merger, you are urged to consult your tax advisor to determine the tax consequences thereof.

   

The summary above is qualified in its entirety by the more detailed discussion provided in the section entitled “Certain Material U.S. Federal Income Tax Considerations.”

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

 

A. Whether the redemption is subject to U.S. federal income tax depends on the particular facts and circumstances. Please see the section entitled “Certain Material U.S. Federal Income Tax Considerations — U.S. Holders — U.S. Holders Exercising Redemption Rights with Respect to 10X Capital Common Stock” or “Certain Material U.S. Federal Income Tax Considerations — Non-U.S. Holders — Non-U.S. Holders Exercising Redemption Rights with Respect to 10X Capital Common Stock” for additional information. You are urged to consult your tax advisors regarding the tax consequences of exercising your redemption rights.

Q. What positive and negative factors did the 10X Capital board of directors consider when determining to enter into the Merger Agreement and what was its rationale for approving the Merger?

 

A. The 10X Capital board of directors considered the following positive factors, although not weighted or in any order of significance:

•   REE’s readiness to enter the public markets on an accelerated timeframe compared to other potential targets was a key factor in 10X Capital’s analysis of the potential viability of a business combination with REE.

•   Given the lack of borrowed debt on REE’s balance sheet, and the attractiveness of the EV sector, as evidenced by the recent positive reception of such sector in the capital markets, 10X Capital concluded that REE would present a strong value proposition for public investors.

•   10X Capital believes that REE’s modular platform technology, covering a variety of vehicle weight classes, together with its expanding global footprint, positions REE to take advantage of the cash accreting to the REE balance sheet through the Merger to grow and expand REE’s business model.

•   REE offers a highly differentiated, extensively patented solution, which demonstrates clear competitive advantages over competing electric vehicle drivetrain, platform and by-wire solutions, including conventional “skateboards” and in-wheel/hub motor technology.

•   REE’s management team is highly experienced in automotive, engineering and serial entrepreneurship.

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In considering the potential business combination with REE, the 10X Capital board of directors gave consideration to the following negative factors, although not weighted or in any order of significance:

•   10X Capital’s Public Stockholders will hold a minority share position in REE following the Merger.

•   10X Capital’s stockholders may object to and challenge the Merger and take actions that may prevent or delay the consummation of the Merger, including to vote down the proposals at the Special Meeting or exercise their redemption rights.

•   The potential for diversion of management and employee attention during the period prior to completion of the Merger, and the potential negative effects on REE’s business.

•   The risk that, despite the efforts of 10X Capital and REE prior to the consummation of the Merger, REE may lose key personnel, and the potential resulting negative effects on REE’s business.

•   The possibility that REE might not achieve its projected financial results.

•   The risks associated with macroeconomic uncertainty, including as it relates to COVID-19, and the effects it could have on REE’s business.

•   The risk that 10X Capital does not obtain the proceeds of the PIPE Investment resulting in 10X Capital being unable to retain sufficient cash in the Trust Account to meet the requirements of the Merger Agreement.

•   The Merger Agreement prohibits 10X Capital from soliciting or engaging in discussions regarding alternative transactions during the pendency of the Merger.

•   Risks and costs to 10X Capital if the Merger is not completed, including the risk of liquidation.

•   10X Capital did not obtain a third-party valuation or fairness opinion in connection with the Merger.

•   Potential changes in the regulatory landscape or new industry developments, including changes in client preferences, may adversely affect the business benefits anticipated to result from the Merger.

•   Risks of the type and nature described under the section entitled “Risk Factors” beginning on page 33.

The foregoing discussion of material factors considered by the 10X Capital board of directors is not intended to be exhaustive but does set forth the principal factors considered.

The 10X Capital board of directors also considered whether members of 10X Capital’s management and board of directors may have interests in the Merger that are different from, or are in addition to, the interests of 10X Capital’s stockholders generally, including the matters described under the subsection entitled “Proposal No. 1 — Interests of 10X Capital’s Directors and Officers in the Merger.” However, the 10X Capital board of directors concluded that (i) these interests were disclosed in the 10X Capital IPO prospectus and are included in this proxy statement/prospectus, (ii) these disparate interests would exist with respect to a business combination with any target company, (iii) 10X Capital’s stockholders will have the opportunity to redeem their Public Shares in connection with the Merger and (iv) shares of REE held by 10X Capital’s officers, directors and other initial stockholders, as well as certain shareholders of REE are subject to transfer restrictions following the Merger. For more information, see the section entitled “Proposal No. 1 — The Merger Proposal — The 10X Capital Board of Directors’ Reasons for the Approval of the Merger.”

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Q. Did the 10X Capital board of directors obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Merger?

 

A. The 10X Capital board of directors did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Merger with REE. The officers and directors of 10X Capital have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of 10X Capital’s financial advisors, enabled them to make the necessary analyses and determinations regarding the Merger with REE. In addition, 10X Capital’s officers and directors and its advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the 10X Capital board of directors in valuing REE’s business, and assuming the risk that the board of directors may not have properly valued such business.

Q. How many votes do I have at the Special Meeting?

 

A. 10X Capital stockholders are entitled to one vote at the Special Meeting for each share of 10X Capital Common Stock held of record as of June 2, 2021, the record date for the Special Meeting. As of the close of business on the record date, there were 25,156,250 shares of 10X Capital Common Stock outstanding. This consists of 20,125,000 shares of 10X Capital Class A Common Stock and 5,031,250 shares of 10X Capital Class B Common Stock.

Q. What vote is required to approve the proposals presented at the Special Meeting?

 

A. The approval of the Merger Proposal, the Class B Charter Proposal, and the Material Differences Charter Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of 10X Capital Common Stock entitled to vote. The approval of the Adjournment Proposal, if presented, will require the affirmative vote of a majority of the votes cast by holders of shares of 10X Capital Common Stock present and entitled to vote at the Special Meeting. A stockholder’s failure to vote by proxy or to vote virtually at the Special Meeting will have the same effect as voting “AGAINST” the Merger Proposal, the Class B Charter Proposal, or the Material Differences Charter Proposal; but, assuming a quorum is established, will have no effect on the Adjournment Proposal.

Q. What constitutes a quorum at the Special Meeting?

 

A. Holders of a majority in voting power of 10X Capital Common Stock issued and outstanding and entitled to vote at the Special Meeting constitute a quorum. In the absence of a quorum, the chairman of the meeting has power to adjourn the Special Meeting. As of the record date, 12,578,126 shares of 10X Capital Common Stock would be required to achieve a quorum.

Q. How do the insiders of 10X Capital intend to vote on the proposals?

 

A. The Sponsor beneficially owns and is entitled to vote an aggregate of approximately 20% of the outstanding shares of 10X Capital’s Common Stock. The Sponsor has agreed to vote its securities in favor of each of the proposals.

Q. What interests do the Sponsor and the current officers and directors of 10X Capital have in the Merger?

 

A. In considering the recommendation of the 10X Capital board of directors to vote in favor of the Merger, 10X Capital stockholders should be aware that, aside from their interests as stockholders, the Sponsor and certain of 10X Capital’s directors and officers have interests in the Merger that are different from, or in addition to, those of other stockholders generally. 10X Capital’s directors were aware of and considered these interests, among other matters, in evaluating the Merger, in recommending to stockholders that they approve the Merger and in agreeing to vote their shares in favor of the Merger. Stockholders should take these interests into account in deciding whether to approve the Merger. These interests include, among other things, the fact that:

   

•   Certain of 10X Capital’s officers and directors, including Hans Thomas, David Weisburd, Oliver Wriedt, Guhan Kandasamy, Woodrow H. Levin, Chris Jurasek, Sigurgeir Orn (“Ziggy”) Jonsson and Gil Penchina, have a direct or indirect economic interest in the Sponsor.

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•   If the Merger with REE or another business combination is not consummated by May 27, 2022, 10X Capital 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 Sponsor Shares held by the Sponsor, which were acquired for an aggregate purchase price of $25,000 prior to the IPO, would be worthless because the Sponsor is not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of $50,010,625 based upon the closing price of $9.94 per share on Nasdaq on May 28, 2021. On the other hand, if the Merger is consummated, each outstanding share of 10X Capital Class A Common Stock will be converted into REE Class A Ordinary Shares.

   

•   The Sponsor purchased 5,500,000 Private Warrants from 10X Capital for $1.00 per Private Warrant. This purchase took place on a private placement basis simultaneously with the consummation of the IPO. A portion of the net proceeds of the IPO (including the net proceeds of the underwriters’ exercise of their over-allotment option) and the simultaneous private placement of the Private Warrants, a total of $201,250,000 was placed in the Trust Account. Such Private Warrants had an aggregate market value of $9,130,000 based upon the closing price of $1.66 per Public Warrant on Nasdaq on May 28, 2021. The Private Warrants and the 10X Capital Class A Common Stock underlying the Private Warrants will become worthless if 10X Capital does not consummate an initial business combination by May 27, 2022 (or such later date as may be approved by 10X Capital stockholders). On the other hand, if the Merger is consummated, each outstanding whole 10X Capital Warrant will become a REE Warrant exercisable to purchase one REE Class A Ordinary Share following consummation of the Merger and each outstanding share of 10X Capital Class A Common Stock will be converted into one REE Class A Ordinary Share.

   

•   The Sponsor, 10X Capital’s officers or directors, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on 10X Capital’s behalf, such as identifying and investigating possible business targets and business combinations. Since inception through May 14, 2021, such reimbursable expenses have totaled less than $75,000 in the aggregate. See the section entitled “Proposal No. 1 — The Merger Proposal — Interests of 10X Capital’s Directors and Officers in the Merger.”

Q. Do I have redemption rights?

 

A. If you are a holder of Public Shares, you have the right to request that 10X Capital redeem all or a portion of your Public Shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus. Public Stockholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the Merger Proposal or any other proposal set forth herein. If you wish to exercise your redemption rights, see the answer to the next question: “How do I exercise my redemption rights?”

   

Notwithstanding the foregoing, a public stockholder, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its Public Shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the Public Shares, then any such shares in excess of that 15% limit would not be redeemed for cash. In addition, pursuant to 10X Capital’s Charter, in no event will 10X Capital redeem public shares in an amount that would cause its net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001. In such case, 10X Capital would not proceed with the redemption of Public Shares and the Merger, and instead may search for an alternate initial business combination.

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The Sponsor has agreed to waive its redemption rights in connection with the consummation of the Merger with respect to all of the shares of 10X Capital Common Stock held by the Sponsor in connection with the consummation of the Merger. See the section titled “Special Meeting of 10X Capital Stockholders — Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash.

Q. How do I exercise my redemption rights?

 

A. In order to exercise your redemption rights, you must, prior to 5:00 p.m., Eastern time on         , 2021 (two business days before the Special Meeting), (x) submit a written request, which includes the name of the beneficial owner of the Public Shares to be redeemed, to 10X Capital’s transfer agent that 10X Capital redeem your Public Shares for cash, and (y) deliver your stock to our transfer agent physically or electronically through the Depository Trust Company (“DTC”). The address of Continental Stock Transfer & Trust Company, 10X Capital’s transfer agent, is listed under the question “Who can help answer my questions?” below.

   

Any demand for redemption, once made, may be withdrawn at any time until the date of the Special Meeting. After the date of the Special Meeting, a demand for redemption may only be withdrawn with 10X Capital’s written consent. If you deliver your shares for redemption to 10X Capital’s transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that 10X Capital’s transfer agent return the shares to you (physically or electronically). You may make such request by contacting 10X Capital’s transfer agent at the address listed under the question “Who can help answer my questions?” below.

Q. Do I have appraisal rights if I object to the proposed Merger?

 

A. Under Section 262 of the General Corporation Law of the State of Delaware, the holders of 10X Capital Common Stock and 10X Capital Warrants will not have appraisal rights in connection with the Merger.

Q. If I am a Warrant holder, can I exercise redemption rights with respect to my Warrants?

 

A. No. The holders of Warrants have no redemption rights with respect to such securities.

Q. If I am a Unit holder, can I exercise redemption rights with respect to my Units?

 

A. No. Holders of outstanding Units must separate the underlying shares of 10X Capital Common Stock and Public Warrants prior to exercising redemption rights with respect to the Public Shares.

   

If you hold Units registered in your own name, you must deliver the certificate for such Units to Continental Stock Transfer & Trust Company, 10X Capital’s transfer agent, with written instructions to separate such Units into Public Shares and Public Warrants. This must be completed far enough in advance to permit the mailing of the Public Share certificates back to you so that you may then exercise your redemption rights upon the separation of the Public Shares from the Units. See “How do I exercise my redemption rights?” above. The address of Continental Stock Transfer & Trust Company is listed under the question “Who can help answer my questions?” below.

   

If a broker, bank, or other nominee holds your Units, you must instruct such broker, bank or nominee to separate your Units. Your nominee must send written instructions by facsimile to Continental Stock Transfer & Trust Company, 10X Capital’s transfer agent. Such written instructions must include the number of Units to be split and the nominee holding such Units. Your nominee must also initiate electronically, using DTC’s deposit withdrawal at custodian (DWAC) system, a withdrawal of the relevant Units and a deposit of an equal number of Public Shares and Public Warrants. This must be completed far enough in advance to permit your nominee to exercise your redemption rights upon the separation of the Public Shares from the Units. While this is typically done electronically the same business day, you should allow at least one full business day to accomplish the separation. If you fail to cause your Public Shares to be separated in a timely manner, you will likely not be able to exercise your redemption rights.

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Q. I am a 10X Capital warrant holder. Why am I receiving this proxy statement/prospectus?

 

A. As a holder of 10X Capital Warrants, which will become REE Warrants, you will be entitled to purchase one REE Share in lieu of one share of 10X Capital Class A Common Stock at a purchase price of $11.50 upon consummation of the Merger. This proxy statement/prospectus includes important information about REE and the business of REE and its subsidiaries following consummation of the Merger. Since holders of 10X Capital Warrants will become holders of REE Warrants and may become holders of REE Class A Ordinary Shares upon consummation of the Merger, we urge you to read the information contained in this proxy statement/prospectus carefully.

Q. What happens to the funds deposited in the Trust Account after consummation of the Merger?

 

A. Of the net proceeds of 10X Capital’s IPO (including the net proceeds of the underwriters’ exercise of their over-allotment option) and the simultaneous private placement of the Private Warrants, a total of $201,250,000 was placed in the Trust Account. After consummation of the Merger, the funds in the Trust Account will be released to REE and used by REE to pay holders of the Public Shares who exercise redemption rights, to pay fees and expenses incurred in connection with the Merger with REE (including fees of an aggregate of $7,568,750 to certain underwriters in connection with the IPO) and for other expenses incurred by 10X Capital following the IPO.

Q. What happens if a substantial number of Public Stockholders vote in favor of the Merger Proposal and exercise their redemption rights?

 

A. Unlike other blank check companies that require public stockholders to vote against a merger in order to exercise their redemption rights, 10X Capital’s Public Stockholders may vote in favor of the Merger and exercise their redemption rights. Accordingly, the Merger may be consummated even though the funds available from the Trust Account and the number of Public Stockholders is substantially reduced as a result of redemption by Public Stockholders. However, the Merger will not be consummated if, upon the consummation of the Merger, 10X Capital does not have at least $5,000,001 in net tangible assets after giving effect to the payment of amounts that 10X Capital will be required to pay to redeeming stockholders upon consummation of the Merger. In the event of significant redemptions, with fewer Public Shares and Public Stockholders, the trading market for REE Class A Ordinary Shares may be less liquid than the market for shares of 10X Capital Common Stock was prior to the Merger and REE may not be able to meet the listing standards for Nasdaq or another national securities exchange.

Q. What happens if the Merger is not consummated?

 

A. If 10X Capital does not complete the Merger with REE (or another initial business combination) by May 27, 2022, 10X Capital must redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the amount then held in the Trust Account (approximately $10.00 per share as of December 31, 2020).

Q. When do you expect the Merger to be completed?

 

A. It is currently anticipated that the Merger will be consummated promptly following the Special Meeting which is scheduled for         , 2021; however, such meeting could be adjourned, as described above. For a description of the conditions for the completion of the Merger, see the section entitled “Proposal No. 1 — The Merger Proposal — The Merger Agreement — Conditions to Closing of the Merger.”

Q. When and where will the Special Meeting take place?

 

A. The Special Meeting will be held virtually on         , 2021, at , Eastern time. You may attend the Special Meeting webcast by accessing the web portal located at          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 10X Capital’s directors and officers during the Special Meeting via the Special Meeting webcast.

Q. What do I need to do now?

 

A. 10X Capital urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Merger will affect you as a stockholder and/or warrant holder of 10X Capital. 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.

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Q. How do I vote?

 

A. If you are a holder of record of 10X Capital Common Stock on the record date, you may vote virtually at the Special Meeting or by submitting a 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,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the meeting and vote virtually, obtain a proxy from your broker, bank or nominee.

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 the 10X Capital stockholders, the Special Meeting will be held virtually. Any stockholder wishing to virtually 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 10X Capital Common Stock:

   

•        Shares Held of Record.    If you are a record holder, and you wish to attend the virtual Special Meeting, go to    , 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 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    , 2021.

   

Stockholders will also have the option to listen to the Special Meeting by telephone by calling:

   

•   Within the U.S. and Canada: (toll-free)

   

•   Outside of the U.S. and Canada: (standard rates apply)

   

The passcode for telephone access:          #. You will not be able to vote or submit questions unless you register for and log in to the Special Meeting webcast as described above.

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

 

A. No. As disclosed in this proxy statement/prospectus, your broker, bank or nominee cannot vote your shares on the Merger Proposal unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. Failure to instruct your broker, bank or nominee on how to vote will have the same effect as a vote “AGAINST” the Merger Proposal, the Class B Charter Proposal, or the Material Differences Charter Proposal, but will have no effect on the Adjournment Proposal.

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

 

A. Yes. Stockholders may send a later dated, signed proxy card to 10X Capital at the address set forth below so that it is received by 10X Capital’s Chief Executive Officer prior to the vote at the Special Meeting or attend the Special Meeting virtually and vote. Stockholders also may revoke their proxy by sending a notice of revocation to 10X Capital’s Chief Executive Officer, which must be received by 10X Capital’s Chief Executive Officer prior to the vote at the Special Meeting.

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 Special Meeting and the Merger is approved by stockholders and consummated, you will become a shareholder and/or warrant holder of REE. If you fail to take any action with respect to the Special Meeting and the Merger is not approved, you will continue to be a stockholder and/or warrant holder of 10X Capital.

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 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 10X Capital Common Stock.

Q. What happens if I sell my 10X Capital Common Stock before the Special Meeting?

 

A. The record date for the Special Meeting is earlier than the date of the Special Meeting and earlier than the date the Merger is expected to be completed. If you transfer your shares after the applicable record date, but before the Special Meeting date, unless you grant a proxy to the transferee, you will retain your right to vote at the Special Meeting.

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 10X Capital Common Stock redeemed for a pro rata share of the Trust Account should wait for instructions from 10X Capital’s transfer agent regarding what to do with their certificates. 10X Capital stockholders who exercise their redemption rights must deliver their share certificates to 10X Capital’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 Merger, the 10X Capital Warrants, by their terms, will entitle holders to purchase shares of REE. Therefore, warrantholders need not deliver their warrants to 10X Capital or REE at that time.

Q. Who can help answer my questions?

 

A. If you have questions about the Merger or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact:

   

Hans Thomas
10X Capital Venture Acquisition Corp
1 World Trade Center, 85th Floor
New York, NY 10007
Tel: (212) 257-0069
Email: hans@10Xcapital.com

   

You may also contact the proxy solicitor at:

   

Morrow Sodali LLC
470 West Avenue
Stamford, Connecticut 06902
Tel: (800) 662-5200 or banks and brokers can call collect at (203) 658-9400
Email:  VCVC.info@investor.morrowsodali.com

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You may also obtain additional information about 10X Capital 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 stock (either physically or electronically) to 10X Capital’s transfer agent at the address below at least two (2) business days prior to the Special Meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:

   

Attention: Shareholder Department
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Telephone: 212-509-4000
E-mail: cstmail@continentalstock.com

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the Special Meeting, including the Merger, you should read this entire document carefully, including the Merger Agreement attached as Annex A to this proxy statement/prospectus. The Merger Agreement is the legal document that governs the Merger and share exchange and the other transactions that will be undertaken in connection with the Merger. It is also described in detail in this proxy statement/prospectus in the section entitled “Proposal No. 1 — The Merger Proposal — The Merger Agreement.

Information About the Companies

REE

REE Automotive Ltd. (“REE”), a company organized under the laws of the State of Israel, is a development stage technology company in the field of electric mobility that aims to reinvent the EV and next-generation e-mobility market. REE’s mission is to empower global mobility companies to build any size or shape of electric or autonomous vehicle for various applications and target markets from Class 1 through Class 6 (running as small as short-range delivery vehicles or autonomous passenger vehicles at one end of the spectrum, up to as large as large walk-in/mid-duty delivery trucks or mid-size shuttle buses at the other end). REE strives to be the cornerstone on top of which mobility players can build their dreams of future services, unbound by legacy thinking, as REE carries the next generation of electric and autonomous vehicles on a truly modular and scalable platform.

The mailing address for REE’s principal executive office is 10 Aharon Maskin Street, Tel-Aviv, Israel and its telephone number is +972 0778995193.

Spark Merger Sub, Inc.

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

10X Capital

10X Capital is a blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities. 10X Capital was incorporated under the laws of Delaware on August 10, 2020.

On November 27, 2020, 10X Capital closed its IPO of 17,500,000 Units, with each Unit consisting of one share of 10X Capital Class A Common Stock and one-half of one Public Warrant. Each whole Public Warrant entitles the holder to purchase one share of 10X Capital Class A Common Stock at a purchase price of $11.50 upon consummation of an initial business combination. The Units from the initial public offering were sold at an offering price of $10.00 per Unit, generating total gross proceeds of $175,000,000.

Simultaneously with the consummation of the initial public offering, 10X Capital consummated a private placement of 5,500,000 Private Warrants to the Sponsor. The Private Warrants were sold at an offering price of $1.00 per whole warrant, generating gross proceeds of $5,500,000. The Private Warrants are identical to the Public Warrants sold in the IPO, except that the Private Warrants are not redeemable and are exercisable on a cashless basis as long as they are held by the Sponsor or its permitted transferees. The Sponsor has agreed that these Private Warrants will not be sold or transferred by it (except to certain permitted transferees) until after 10X Capital has completed an initial business combination.

On December 18, 2020, the underwriters exercised in full their over-allotment option to purchase 2,625,000 Units, generating gross proceeds of $26,250,000. 10X Capital funded the Trust Account with $201,250,000 (including $7,568,750 of deferred underwriting fees payable to the underwriters of the initial public offering upon completion of an initial business combination) of the cash proceeds from the IPO (including the exercise of the over-allotment option), and the net proceeds from the Private Warrants after the payment of expenses associated with the IPO.

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The IPO was conducted pursuant to a registration statement on Form S-1 (Reg. No. 333-249072) that became effective on November 23, 2020. As of the date of this proxy statement/prospectus, there was approximately $201.2 million held in the Trust Account.

10X Capital Units, 10X Capital Class A Common Stock and the Public Warrants are listed on Nasdaq under the symbols “VCVCU,” “VCVC,” and “VCVCW,” respectively.

The mailing address of 10X Capital’s principal executive office is 1 World Trade Center, 85th Floor, New York, NY 10007. After the consummation of the Merger, 10X Capital will become a wholly-owned subsidiary of REE.

The Merger Agreement (page 103)

The terms and conditions of the merger of Merger Sub with and into 10X Capital, with 10X Capital surviving the merger as a wholly-owned subsidiary of REE are contained in the Merger Agreement, which is attached as Annex A to this proxy statement/prospectus. We encourage you to read the Merger Agreement carefully, as it is the legal document that governs the Merger.

Merger Consideration

The pro forma equity valuation of REE upon consummation of the Merger is estimated to approximate $3.6 billion. We estimate that, upon consummation of the Merger, assuming none of 10X Capital’s public stockholders demand redemption pursuant to the 10X Capital Charter, the securityholders of REE will own approximately 84.1% of the outstanding REE Class A Ordinary Shares and the securityholders of 10X Capital, including the Public Shareholders, the Sponsor and the PIPE Investors, will own the remaining REE Class A Ordinary Shares.

Pursuant to the Merger Agreement, at the Effective Time of the Merger, each outstanding share of 10X Capital Class A Common Stock will be converted into the right to receive one newly issued REE Class A Ordinary Share. The Existing 10X Capital Charter provides that, upon conversion of 10X Capital Class B Common Stock into 10X Capital Class A Common Stock, the holders of 10X Capital Class B Common Stock shall be entitled to receive a number of additional shares of 10X Capital Class A Common Stock equal to 25% of the number of shares of 10X Capital Class A Common Stock issued to the PIPE Investors. Concurrently with the execution and delivery of the Merger Agreement, 10X Capital, its Insiders, the Sponsor and REE entered into the Letter Agreement. Pursuant to the Letter Agreement, the holders of the shares of 10X Capital Class B Common Stock have agreed to waive their right to receive any Anti-Dilution Shares in excess of 2,900,000, with such waiver resulting in the Conversion Ratio. In addition, up to 1,500,000 of the 2,900,000 Anti-Dilution Shares to be received upon the conversion of 10X Capital Class B Common Stock will be subject to subsequent forfeiture without consideration if the trading prices of REE Class A Ordinary Shares specified below are not achieved following the Merger. 10X Capital’s outstanding warrants to purchase one share of 10X Capital Class A Common Stock shall be converted into the right to receive an equal number of warrants to purchase one REE Class A Ordinary Share, subject to downward adjustment to the next whole number in case of fractions of REE Warrants.

The Sponsor has agreed in the Letter Agreement to forfeit and surrender, on the First Trading Day, a number of REE Class A Ordinary Shares equal to (i) 1,500,000 if the First Trading Day Price is less than $13.00, (ii) 1,000,000 if the First Trading Day Price equals or exceeds $13.00 but is less than $16.00, (iii) 500,000 if the First Trading Day Price equals or exceeds $16.00 but is less than $20.00, and (iv) 0 if the First Trading Day Price equals or exceeds $20.00.

Stock Split

Immediately prior to the Effective Time, all of the REE Preferred Shares will be converted into REE Class A Ordinary Shares, after which (but prior to the Effective Time) REE intends to effect a stock split to cause the value of the outstanding REE Class A Ordinary Shares to equal $10.00 per share.

The 10X Capital Board of Directors’ Reasons for the Merger (page 91)

In evaluating the Merger, the 10X Capital board of directors consulted with 10X Capital’s management and legal and financial advisors. The 10X Capital board of directors reviewed various industry and financial data in order to determine that the consideration to be paid was reasonable and that the Merger was in the best interests of

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10X Capital’s stockholders. The financial data reviewed included the historical and projected consolidated financial statements of REE, comparable publicly traded company analyses and an analysis of pro forma capital structure and trading multiples prepared by management and 10X Capital’s advisors.

10X Capital’s management conducted a due diligence review of REE that included an industry analysis, an analysis of the existing business model of REE and historical and projected financial results. 10X Capital’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 the 10X Capital board of directors, was suitably qualified to conduct the due diligence and other investigations and analyses required in connection with the search for a merger partner. A detailed description of the experience of 10X Capital’s executive officers and directors is included in the section of this proxy statement/prospectus entitled “10X Capital Business — Directors and Executive Officers.

In reaching its unanimous resolution (i) that the terms and conditions of the Merger Agreement, including the proposed Merger, are advisable, fair to and in the best interests of 10X Capital and its stockholders and (ii) to recommend that its stockholders adopt and approve the Merger Agreement and approve the Merger contemplated therein, the 10X Capital 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, the 10X Capital 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. The 10X Capital 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 10X Capital’s reasons for the Merger 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 “Forward-Looking Statements.”

In considering the Merger, the 10X Capital board of directors gave considerable weight to the following factors:

•        Strong value proposition for public investors;

•        Expansion potential;

•        Public company-ready;

•        Differentiated product or service; and

•        Experienced management team.

The 10X Capital board of directors also considered a variety of uncertainties and risks and other potentially negative factors concerning the Merger, including, but not limited to, the following:

•        Public company-ready.    10X Capital believed REE was remarkably well-prepared for an initial public offering of its equity or acquisition by a special purpose acquisition company, with well-developed corporate governance, financial controls and reporting policies already in place. Further, REE had already engaged accounting advisors to prepare PCAOB-standard audited financials, which were anticipated to be ready for the purposes of filing a Registration Statement on Form F-4 without significant lag time. REE’s readiness to enter the public markets on an accelerated timeframe compared to other potential targets was a key factor in 10X Capital’s analysis of the potential viability of a business combination with REE.

•        Strong value proposition for public investors.    Given multiple well-received EV special purpose acquisition company deals that have been announced during 2020 and 2021, 10X Capital believed that a business combination with REE would resonate thematically with public markets investors. 10X Capital determined that REE’s attractive valuation in relation to those comparable entities provided an attractive entry point to the EV ecosystem. Given the lack of borrowed debt on REE’s balance sheet, and the attractiveness of the EV sector, as evidenced by the recent positive reception of such sector in the capital markets, 10X Capital concluded that REE would present a strong value proposition for public investors.

•        Expansion potential.    10X Capital believes that REE’s modular platform technology, covering a variety of vehicle weight classes, together with its expanding global footprint, positions REE to take advantage of the cash accreting to the REE balance sheet through the Merger to grow and expand REE’s business model.

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•        Differentiated product or service.    REE offers a highly differentiated, extensively patented solution, which demonstrates clear competitive advantages over competing electric vehicle drivetrain, platform and by-wire solutions, including conventional “skateboards” and in-wheel/hub motor technology. This is clearly evidenced by the strategic partnerships, investments and memoranda of understanding that REE has secured to date.

•        Experienced management team:    REE’s management team is highly experienced in automotive, engineering and serial entrepreneurship.

The 10X Capital board of directors concluded that the potential benefits that it expected 10X Capital and its stockholders to achieve as a result of the Merger outweighed any potentially negative factors associated with the Merger. Accordingly, the 10X Capital board of directors unanimously determined that the Merger Agreement and the Merger contemplated therein are advisable, fair to and in the best interests of 10X Capital and its stockholders.

Interests of 10X Capital’s Officers and Directors in the Merger (page 96)

When you consider the recommendation of the 10X Capital board of directors in favor of approval of the Merger Proposal, you should keep in mind that 10X Capital’s initial stockholders, including its directors and executive officers, have interests in such proposal that are different from, or in addition to, the interests of a Public Stockholder or a Warrant holder. These interests include, among other things:

•        If the Merger with REE or another business combination is not consummated by May 27, 2022, 10X Capital 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 5,031,250 shares of 10X Capital Class B Common Stock held by 10X Capital’s initial stockholder, the Sponsor, which were acquired for an aggregate purchase price of $25,000 prior to 10X Capital’s IPO, would be worthless because 10X Capital’s initial stockholders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of $50.01 million based upon the closing price of $9.94 per share on the Nasdaq on May 28, 2021.

•        The Sponsor purchased an aggregate of 5,500,000 Private Warrants from 10X Capital for an aggregate purchase price of $5,500,000 (or $1.00 per Warrant). This purchase took place on a private placement basis simultaneously with the consummation of the IPO. A portion of the net proceeds of the IPO (including the net proceeds of the underwriters’ exercise of their over-allotment option) and the simultaneous private placement of the Private Warrants, a total of $201,252,000 was placed in the Trust Account. Such Private Warrants had an aggregate market value of $9,130,000 based upon the closing price of $1.66 per Public Warrant on Nasdaq on May 28, 2021. Private Warrants will become worthless (as will the Public Warrants) if 10X Capital does not consummate an initial business combination by May 27, 2022.

•        The Merger Agreement provides that Hans Thomas, 10X Capital’s Chief Executive Officer and Chairman will become a director of REE. As such, in the future he may receive any cash fees, stock options or stock awards that the REE board of directors determines to pay to its directors.

•        If 10X Capital is unable to complete an initial business combination by May 27, 2022, the Sponsor will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target business(es) or claims of vendors or other entities that are owed money by 10X Capital for services rendered or contracted for or products sold to 10X Capital, but only if such a vendor or target business has not executed a waiver.

•        The Sponsor, as 10X Capital’s initial stockholder, and its affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on 10X Capital’s behalf, such as identifying and investigating possible business targets and business combinations. However, if 10X Capital fails to consummate an initial business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, 10X Capital may not be able to reimburse these expenses if the Merger with REE or another business combination, is not completed by May 27, 2022. Since inception through May 14, 2021, such reimbursable expenses have totaled less than $75,000 in the aggregate.

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•        The Merger Agreement provides that following the Merger, 10X Capital, as the surviving corporation in the Merger, will maintain for not less than six years from the Closing provisions in its organizational documents regarding the indemnification and exoneration of officers and directors that are no less favorable to such persons than the provisions in such organizational documents in effect on the date of the Merger Agreement.

•        The Merger Agreement provides that a six-year “tail,” directors’ and officers’ liability insurance policy covering persons currently covered by 10X Capital’s directors’ and officers’ liability insurance policies on terms not less favorable than the terms of such current directors’ and officers’ liability insurance policies will be purchased, and REE shall or shall cause its subsidiaries to maintain such “tail” policy for its full term.

At any time prior to the Special Meeting, during a period when they are not then aware of any material non-public information regarding 10X Capital or its securities, the Sponsor, as an initial stockholder of 10X Capital, 10X Capital’s officers and directors, REE, the REE officers and directors and/or their respective affiliates, or REE shareholders may purchase Public Shares from institutional and other investors who vote, or indicate an intention to vote, against the Merger 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 10X Capital Common Stock or vote their shares in favor of the Merger Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of the shares outstanding and entitled to vote at the Special Meeting to approve the Merger Proposal vote in its favor, where it appears that such requirements 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 a potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or Private Warrants owned by the Sponsor for nominal value.

Entering into any such arrangements may have a depressive effect on the price of 10X Capital Common Stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase 10X Capital Common Stock 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 Merger to be approved in circumstances where such approval could not otherwise be obtained. Purchases of 10X Capital Common Stock by the persons described above would allow them to exert more influence over the approval of the Merger Proposal and would likely increase the chances that such proposal would be approved.

As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. 10X Capital 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 Merger 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.

Agreements entered into in connection with the Merger Agreement (page 114)

In connection with the Merger, certain related agreements have been, or will be entered into on or prior to the Closing Date, including:

•        Support Agreement pursuant to which 10X Capital and the Sponsor have agreed, among other things, to vote their shares of 10X Capital (representing 20% of such outstanding shares), and take certain other actions, in support of the Merger, and REE and the REE shareholders party thereto have agreed, among other things, to vote their REE Ordinary Shares (representing approximately 95% of such outstanding shares and, together with other shares of REE subject to proxy agreements, representing approximately 99%), and take certain other actions, in support of the Merger.

•        Letter Agreement by and among 10X Capital, the Insiders, the Sponsor and REE, pursuant to which, the Sponsor has agreed to waive its rights to receive certain Anti-Dilution Shares in excess of 2,900,000, and has agreed to forfeit and surrender up to 1,500,000 shares of 10X Capital Class A Common Stock if trading prices of REE Class A Ordinary Shares specified below are not achieved following the Merger.

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•        Investors’ Rights Agreement by and among REE, 10X Capital, the Sponsor, the Insiders, and certain REE shareholders, pursuant to which REE has agreed to grant the other parties thereto registration rights in respect of their REE Class A Ordinary Shares and certain other REE securities and whereby the Sponsor and REE have each agreed, subject to the terms in the Investors’ Rights Agreement, to certain limitations on transferring their REE Class A Ordinary Shares.

•        Subscription Agreements entered into concurrently with the Merger Agreement, by and among REE, 10X Capital and the PIPE Investors subscribing for 10X Capital Class A Common Stock, pursuant to which the PIPE Investors have agreed to purchase, and 10X Capital has agreed to sell, an aggregate of 30,000,000 shares of 10X Capital Class A Common Stock, for the purchase price of $10.00 per share and at an aggregate purchase price of $300,000,000. 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 Merger Agreement. The Subscription Agreements include customary resale registration rights provisions

Certain Material U.S. Federal Income Tax Considerations (page 116)

For a description of certain material U.S. federal income tax consequences of the Merger, the exercise of redemption rights in respect of shares of 10X Capital Common Stock and the ownership and disposition of REE Class A Ordinary Shares and/or REE Warrants, please see the information set forth in “Certain Material U.S. Federal Income Tax Considerations” beginning on page 116.

Certain Material Israeli Tax Considerations (page 132)

For a description of certain Israeli tax consequences of the ownership and disposition of REE Class A Ordinary Shares and/or REE Warrants, please see the information set forth in “Certain Material Israeli Tax Considerations” beginning on page 132.

Redemption Rights

Pursuant to the Existing 10X Capital Charter, a holder of Public Shares may demand that 10X Capital redeem such shares for cash if the Merger is consummated. You will be entitled to receive cash for your Public Shares regardless of whether you vote for or against the Merger Proposal and demand that 10X Capital redeem your shares for cash no later than 5:00 p.m. Eastern time on         , 2021 (two (2) business days prior to the Special Meeting) by (A)  submitting your redemption request, which includes the name of the beneficial owner of the Public Shares to be redeemed, in writing to Continental Stock Transfer & Trust Company and (B) delivering your stock to 10X Capital’s transfer agent physically or electronically using DTC’s DWAC (Deposit Withdrawal at Custodian) System. If the Merger is not completed, these shares will not be redeemed for cash. In such case, 10X Capital will promptly return any shares delivered by holders of Public Shares for redemption and such holders may only share in the assets of the Trust Account upon the liquidation of 10X Capital. This may result in holders receiving less than they would have received if the Merger was completed and they had exercised their redemption rights in connection therewith due to potential claims of creditors. If a holder of Public Shares properly demands redemption, 10X Capital will redeem each Public Share for a full pro rata portion of the Trust Account, calculated as of two business days prior to the anticipated consummation of the Merger. As of June 2, 2021, the record date, this would amount to approximately $10 per share. If a holder of Public Shares exercises its redemption rights, then it will be exchanging its shares of 10X Capital Common Stock for cash and will no longer own the shares. See the section entitled “Special Meeting of 10X Capital Stockholders — Redemption Rights” for a detailed description of the procedures to be followed if you wish to convert your shares of 10X Capital Common Stock into cash.

Holders of Warrants and Units will not have redemption rights with respect to such securities.

Appraisal Rights

10X Capital stockholders (including the initial stockholders) and holders of other 10X Capital securities do not have appraisal rights in connection with the merger under the DGCL.

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The Class B Charter Proposal

If the Merger Proposal is approved, 10X Capital stockholders will be asked to approve an amendment to the Existing 10X Capital Charter that will provide for the conversion of 10X Capital Class B Common Stock into 10X Capital Class A Common Stock at the Conversion Ratio, which reflects a partial waiver by the Sponsor of its right under the Existing 10X Capital Charter to receive Anti-Dilution Shares, immediately prior to the Merger.

The Material Differences Charter Proposal

If the Merger Proposal is approved, 10X Capital stockholders will be asked to approve the material differences between the Existing 10X Capital Charter and the Amended and Restated Articles to be in effect following the Merger. Please see the section entitled “Proposal No. 3 — The Material Differences Charter Proposal.”

The Adjournment Proposal

If, based on the tabulated vote, there are not sufficient votes at the time of the Special Meeting to authorize 10X Capital to consummate the Merger, the 10X Capital board of directors may submit a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation of proxies. Please see the section entitled “Proposal No. 4 — The Adjournment Proposal.”

Date, Time and Place of Special Meeting of 10X Capital’s Stockholders

The Special Meeting of the stockholders of 10X Capital will be held virtually at         , Eastern time, on         , 2021, and accessible at          or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed, to consider and vote upon the Merger Proposal, the Class B Charter Proposal, the Material Differences Charter Proposal and if necessary, the Adjournment Proposal.

Voting Power; Record Date

Stockholders will be entitled to vote or direct votes to be cast at the Special Meeting if they owned shares of 10X Capital Common Stock at the close of business on June 2, 2021, which is the record date for the Special Meeting. Stockholders will have one vote for each share of 10X Capital 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. Warrants do not have voting rights. On the record date, there were 25,156,250 shares of 10X Capital Common Stock outstanding, of which 20,125,000 were Public Shares.

Quorum and Vote of 10X Capital Stockholders

A quorum of 10X Capital stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if a majority of the outstanding shares entitled to vote at the meeting are represented virtually or by proxy. Abstentions will count as present for the purposes of establishing a quorum; Broker Non-Votes will not. The proposals presented at the Special Meeting will require the following votes:

•        Pursuant to the DGCL, the approval of the Merger Proposal will require the affirmative vote of the holders of a majority of the outstanding shares of 10X Capital Common Stock. There are currently 25,156,250 shares of 10X Capital Common Stock outstanding, of which 20,125,000 are Public Shares.

•        Pursuant to the DGCL, the approval of the Class B Charter Proposal will require the affirmative vote of the holders of a majority of the outstanding shares of 10X Capital Common Stock. There are currently 25,156,250 shares of 10X Capital Common Stock outstanding, of which 20,125,000 are Public Shares.

•        Pursuant to the DGCL, the approval of the Material Differences Charter Proposal will require the affirmative vote of the holders of a majority of the outstanding shares of 10X Capital Common Stock. There are currently 25,156,250 shares of 10X Capital Common Stock outstanding, of which 20,125,000 are Public Shares.

•        The approval of the Adjournment Proposal, if presented, will require the affirmative vote of a majority of the votes cast by holders of shares of 10X Capital Common Stock present and entitled to vote at the meeting.

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Abstentions will have the same effect as a vote “AGAINST” the Merger Proposal, the Class B Charter Proposal, or the Material Differences Charter Proposal, but will have no effect on the Adjournment Proposal. Broker Non-Votes will have the same effect as a vote “AGAINST” the Merger Proposal, the Class B Charter Proposal, the Material Differences Charter Proposal, or the Adjournment Proposal.

The Merger is conditioned on the approval of each of the Condition Precedent Proposals. The Condition Precedent Proposals are cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal. Each of these proposals is more fully described in this proxy statement/prospectus, which each stockholder is encouraged to read carefully and in its entirety.

Certain Voting Arrangements

As of November 24, 2020, the Sponsor beneficially owned and was entitled to vote 5,031,250 shares of 10X Capital Common Stock. The foregoing unadjusted shares represent approximately 20% of the issued and outstanding shares of 10X Capital Common Stock. The Sponsor has entered into the Support Agreement whereby it has agreed to vote its shares in favor of, and take certain other actions in support of, the Merger.

Proxy Solicitation

Proxies may be solicited by mail, telephone or in person. 10X Capital has engaged Morrow Sodali LLC to assist in the solicitation of proxies.

If a stockholder grants a proxy, it may still vote its shares virtually if it revokes its proxy before the Special Meeting. A stockholder may also change its vote by submitting a later-dated proxy as described in the section entitled “Special Meeting of 10X Capital Stockholders — Revoking Your Proxy.”

Recommendation to Stockholders

The 10X Capital board of directors believes that the Merger Proposal and the other proposals to be presented at the Special Meeting are fair to and in the best interest of 10X Capital’s stockholders and unanimously recommends that its stockholders vote “FOR” the Merger Proposal, “FOR” the Class B Charter Proposal, “FOR” the Material Differences Charter Proposal and “FOR” the Adjournment Proposal, if presented.

Comparison of Rights of Stockholders of 10X Capital and Shareholders of REE (page 234)

If the Merger is successfully completed, holders of 10X Capital Common Stock will become holders of REE Class A Ordinary Shares, and their rights as shareholders will be governed by REE’s organizational documents. There are also differences between the laws governing 10X Capital, a Delaware corporation, and REE, an Israeli company. Please see “Comparison of Rights of REE Shareholders and 10X Capital Stockholders” on page 234 for more information.

Emerging Growth Company

Each of 10X Capital and REE is, and consequently, following the Merger, REE 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, REE 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 REE’s securities less attractive as a result, there may be a less active trading market for REE’s securities and the prices of REE’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

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companies but any such election to opt out is irrevocable. REE 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, REE, 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 REE’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

REE 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 Merger, (b) in which REE has total annual gross revenue of at least $1.07 billion, or (c) in which REE is deemed to be a large accelerated filer, which means the market value of REE’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 REE 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.

Foreign Private Issuer

REE expects to be a “foreign private issuer” under SEC rules following the consummation of the Merger. Consequently, REE will be subject to the reporting requirements under the Exchange Act applicable to foreign private issuers. REE will be required to file its annual report on Form 20-F for the year ending December 31, 2021 with the SEC by April 30, 2021. In addition, REE will furnish reports on Form 6-K to the SEC regarding certain information required to be publicly disclosed by REE in Israel or that is distributed or required to be distributed by REE to its shareholders.

Based on its foreign private issuer status, REE 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. REE 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, REE 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 REE Class A Ordinary Shares.

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

Regulatory Matters

The Merger is not subject to any federal or state regulatory requirement or approval, except for filings with the State of Delaware necessary to effectuate the Merger.

Risk Factors

In evaluating the proposals to be presented at the Special Meeting, a stockholder should carefully read this proxy statement/prospectus, including the annexes, and especially consider the factors discussed in the section entitled “Risk Factors.” Some of the risks related to REE and 10X Capital are summarized below:

•        REE’s business model has yet to be tested and any failure to commercialize its strategic plans could have an adverse effect on its operating results, business, or reputation, resulting in substantial liabilities that may exceed its resources.

•        REE’s marketing and sales model is different from predominant and current models in the automobile industry, making evaluation of its business, operating results and future prospects difficult. Should such a model fail to achieve market acceptance, REE may not be able to achieve profitability.

•        REE’s agreements with potential customers, potential suppliers and potential strategic partners are preliminary in nature.

•        REE’s products are currently in development and there are risks associated with developing existing advanced prototypes into marketable products.

•        REE’s development of an outsourced manufacturing business model may not be successful, which could harm its ability to deliver products and recognize revenue.

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•        Although REE has projected unit sales based on an assessment of strategic collaborations and the possibility of sales to potential partners, considering a range of assumptions, REE has not entered into any definitive purchase agreements with potential customers.

•        REE is reliant on its UK Engineering Center of Excellence for the design, validation, verification, testing and homologation of its products.

•        REE’s limited operating history may make evaluation of its business and future prospects difficult, increasing the risk of investment in REE.

•        REE’s projected financial information relies in large part upon internally developed assumptions and analyses, that if proven incorrect could result in significantly lower actual results.

•        REE’s business model is subject to risks associated with its anticipated initial commercial production in 2022 and subsequent increased commercial production in 2023.

•        REE will be dependent on its potential suppliers, including but not limited to body manufacturers and battery providers, some of which will be single or limited source suppliers, and the inability of such suppliers to deliver the components of REE’s products in a timely manner or at all and at prices and volumes acceptable to REE could have a material adverse effect on its business, prospects and operating results.

•        If the market for commercial EVs does not develop as REE expects or develops slower than REE expects, its business prospects, financial condition, and operating results may be adversely affected.

•        REE operates in a highly competitive market against a large number of both established competitors and new market entrants, and many market participants have substantially greater resources than REE;

•        Political, economic and military conditions in Israel could adversely affect REE’s business.

•        10X Capital’s current directors and executive officers beneficially own shares of 10X Capital Common Stock and Warrants that will be worthless if the Merger is not approved. Such interests may have influenced their decision to approve the Merger with REE.

•        Subsequent to the completion of the Merger, REE 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 REE’s ordinary share price, which could cause you to lose some or all of your investment.

•        Following the Merger, REE’s voting control will be concentrated among the holders of REE Class B Ordinary Shares. As a result, the market price of REE Class A Ordinary Shares may be materially adversely affected by such disparate voting rights.

•        10X Capital did not obtain a fairness opinion from an independent investment banking or accounting firm, and consequently, Investors have no assurance from an independent source that the price 10X Capital is paying in connection with the Merger is fair to 10X Capital from a financial point of view.

•        If 10X Capital Public Stockholders fail to properly demand redemption of their shares, they will not be entitled to redeem their shares of 10X Capital Common Stock for a pro rata portion of the Trust Account.

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UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA OF 10X CAPITAL AND REE

The following table sets forth summary historical comparative share and unit information for 10X Capital and REE and unaudited pro forma condensed combined per share information of 10X Capital after giving effect to the Merger (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 10X Capital stockholders exercise redemption rights with respect to their Public Shares.

•        Assuming Maximum Redemptions:    This presentation assumes that all 10X Capital Public Stockholders holding approximately 19,019,236 Public Shares will exercise their redemption rights for the $190.2 million of funds in 10X Capital Corporation’s Trust Account. Each of REE’s and 10X Capital’s obligations under the Merger Agreement are subject to 10X Capital having (i) at least $225.0 million (the “Minimum Cash Amount”) and (ii) net tangible assets of at least $5.0 million either immediately prior to or upon consummation of the Merger.

The unaudited pro forma book value information reflects the Merger as if it had occurred on December 31, 2020. The weighted average shares outstanding and net earnings per share information reflect the Merger as if it had occurred on January 1, 2020.

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 10X Capital and REE and related notes that are included elsewhere in this proxy statement/prospectus. The unaudited pro forma combined per share information of 10X Capital and REE 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/ 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 10X Capital and REE would have been had the companies been combined during the periods presented.

             

Combined Pro Forma and
Equivalent Pro Forma(3),(4)

   

10X Capital(1)

 

REE

 

REE
Post-
Split***(3)

 

Assuming No Redemptions

 

Assuming Maximum Redemptions

As of and For the Year Ended December 31, 2020(2),(3)

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

Book value per share

 

$

0.99

 

 

$

6.94

 

 

0.26

 

 

$

1.95

 

 

$

1.37

 

Issued and outstanding shares

 

 

5,031,250

 

 

 

6,594,008

 

 

176,104,174

 

 

 

234,160,398

 

 

 

218,202,529

 

Weighted average number of shares – basic and diluted*

 

 

4,438,802

 

 

 

5,839,724

**

 

155,959,740

 

 

 

253,454,598

 

 

 

237,496,729

 

Net loss per share – basic and diluted

 

$

(2.18

)

 

$

(11.59

)

 

(0.43

)

 

$

(0.32

)

 

$

(0.34

)

____________

*        For the purposes of applying the if converted method of calculating diluted loss per share, it was assumed that all warrants and stock options to purchase REE Class A Ordinary Shares post-Merger are anti-dilutive except for, the pro forma weighted average number of shares — basic and diluted, which includes 39.4 million fully vested options to be granted to REE’s Founders assuming an exercise price equal to par value immediately prior to the closing of the Merger and are included both in the basic and diluted loss per share calculation (refer to note 4 adjustment (K) on page 191).

**      Represents the weighted average shares outstanding before the split.

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***    Calculated for standalone REE after giving effect to the Stock Split to be effected immediately prior to the Effective Time based on a forward stock split ratio of 1:26.71. The forward split ratio is an estimate and is subject to change.

(1)      Book value per share equals total equity divided by total shares outstanding including preferred shares. The 10X Capital historical shares outstanding excludes 20,125,000 shares subject to redemption for 10X Capital at December 31, 2020.

(2)      No cash dividends were declared during the periods presented.

(3)      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 per the Merger Agreement, which is 1:1.

(4)      Because the Exchange Ratio per the Merger Agreement is 1:1, the combined pro forma book value per share and pro forma net loss per share is equal to the Equivalent Pro Forma.

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PRICE RANGE OF SECURITIES AND DIVIDENDS

10X Capital

10X Capital Units, 10X Capital Class A Common Stock and 10X Capital Warrants are currently listed on Nasdaq under the symbols “VCVCU,” “VCVC” and “VCVCW,” respectively. Each 10X Capital Unit consists of one share of 10X Capital Class A Common Stock and one-half of one Public Warrant. Each whole 10X Capital Warrant entitles its holder to purchase one share of 10X Capital Class A Common Stock at a price of $11.50 per share. 10X Capital Units commenced trading on Nasdaq on November 24, 2020. 10X Capital Class A Common Stock and 10X Capital Warrants commenced trading on Nasdaq on January 12, 2021.

Holders

As of April 28, 2021, there were 834 holder(s) of record of 10X Capital Units,13,713 holder(s) of record of 10X Capital Class A Common Stock and 2,129 holder(s) of record of 10X Capital Warrants. Management believes 10X Capital has in excess of 13,000 beneficial holders of its securities.

Dividends

10X Capital has not paid any dividends to its shareholders.

REE

Market Price of REE Class A Ordinary Shares

Historical market price information regarding REE is not provided because there is no public market for its securities. REE is applying to list its REE Class A Ordinary Shares and REE Warrants on Nasdaq upon the Effective Time under the ticker symbols “REE” and “REEAW,” respectively.

Holders

As of June 2, 2021, the record date, REE had 37 holders of record.

Dividends

REE has not paid any dividends to its shareholders. Following the completion of the Merger, REE’s board of directors will consider whether or not to institute a dividend policy. It is presently intended that REE will retain its earnings for use in business operations and, accordingly, it is not anticipated that REE’s board of directors will declare dividends in the foreseeable future.

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RISK FACTORS

Stockholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement/prospectus. This proxy statement/prospectus also contains forward-looking statements that involve risks and uncertainties and actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this proxy statement/prospectus. Unless the context otherwise requires, all references in this section to “we,” “us,” or “our” refer to REE Automotive Ltd. and its subsidiaries prior to the consummation of the Merger and all references in this section to “REE product” or “REE products” refer to: the “REEcorner” and the “REEboard” (which together may be referred to as a “REE platform”), and any other related technology developed by REE, either together or separately as the context requires.

Risks Related to REE’s Business

REE’s limited operating history may make evaluation of its business and future prospects difficult, increasing the risk of investment in REE.

REE faces risks and challenges as an early stage company with a limited operating history. REE has a limited operating history in the automotive industry on which investors can base an evaluation of its business, operating results and prospects. Since REE has not yet commercialized any automotive products, it is difficult to predict REE’s future revenues and expenses, and REE has limited insight into trends that may emerge and affect its business. There can be no assurance that potential customers will purchase REE’s automotive products at any level or at a level that is profitable for REE. REE’s historical operating data is associated with its Softwheel segment involving sales of wheels with wheel-based suspension technologies for wheelchairs; however, this data does not relate to any REE activity in the automotive industry. Market conditions, many of which are outside of REE’s control and subject to change, including general economic conditions, the availability and terms of financing, the impacts and ongoing uncertainties created by the COVID-19 pandemic, civil discourse throughout the globe, effects and impact of climate change and global warming, regulatory requirements and incentives, competition and the pace and extent of vehicle electrification generally, could impact demand for REE’s products and ultimately REE’s success.

REE’s projected financial information relies in large part upon internally developed assumptions and analyses, that if proven incorrect could result in significantly lower actual results.

The projected financial information appearing elsewhere in this proxy statement/prospectus reflects current estimates of future performance and incorporates certain financial and operational assumptions, including the level of demand for REE’s products, the performance of REE’s products, the projected bill of materials for REE’s products and the projected gross margin achievable upon sale of REE’s products. The projected financial and operating information is based in part upon projected unit sales reflecting REE’s assessment of strategic collaborations, which include signed memorandums of understanding (“MOUs”) and strategic, alliance and development agreements, and the possibility of sales to potential partners, considering a range of assumptions including, but not limited to, volumes, timelines, average selling prices, the development and commercialization of REE’s products, potential market and sector opportunities, the roll out of REE’s future integration centers locations, the production capacity of REE’s future integration centers, the selection of REE’s products by customers and by segment, and growth in the various markets REE is targeting. While REE believes the strategic collaborations support REE’s potential growth trajectory, such strategic collaborations generally are non-binding and certain of the strategic collaborations may be terminated for convenience by either party. REE’s strategic collaborations generally do not set forth specific development timeframes or represent a commitment by either party to develop, produce or deliver REE’s products. Additionally, the projected unit sales do not represent sales or purchase obligations unless and until definitive purchase agreements are signed. As a result, there can be no guarantee that these projections of unit sales will reflect the actual sale of REE products in the future. These assumptions represent REE’s best estimates and there can be no assurance that the actual results will be

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in line with REE’s expectations. In addition, whether actual operating and financial results and business development will be consistent with REE’s expectations and assumptions as reflected in its forecast depends on a number of factors, many of which are outside REE’s control, including, but not limited to:

•        the extent to which projections of unit sales will reflect the actual sale of REE products in the future;

•        the extent to which REE can actualize the value proposition of the REE products including, but not limited to, short time to market for potential customers, cost efficiencies related to its business model with limited capital expenditure requirements and projected total cost of ownership, and the availability of mission-specific vehicles that maximize cabin and storage space on a smaller overall footprint;

•        there is no guarantee that REE will be able to successfully outsource manufacturing and utilize future integration centers for the assembly of REE products;

•        the extent to which growth of e-mobility markets and continued shift in consumer preference will conform with projections;

•        REE’s ability to validate, verify and test REE products compatible with Class 1 through Class 6 platform models as currently projected, which the failure to do so with respect to any class would reduce REE’s projected total addressable market;

•        the extent to which REE’s projected bill of materials conform with the actual bill of materials upon start of production, deviation from which could negatively impact the projected total cost of ownership or projected gross margin;

•        the projected total cost of ownership is based upon a number of projected factors based on management expectations, the deviation from which could negatively impact the actual total cost of ownership offered to potential customers;

•        whether REE can obtain sufficient capital to sustain and grow its business; and

•        the timing and costs of new and existing marketing and promotional efforts, including with respect to the “Powered by REE” brand.

In the event that actual results differ from REE’s projected financial information or if REE adjusts its projections in future periods, REE’s share price could be materially adversely affected.

REE may not succeed in controlling the costs associated with its operations.

REE will require significant capital to develop and grow its business, including developing and assembling REE products, building future integration centers and developing REE’s intellectual property portfolio and brand. REE expects to incur significant expenses that will impact its profitability, including research and development expenses, sales and distribution expenses as REE builds its brand and markets its products, and general and administrative expenses as it scales its operations. REE’s ability to become profitable in the future will not only depend on its ability to successfully market its products, but also to control its costs. If REE is unable to efficiently design, assemble, market, sell and distribute its products, its margins, profitability and prospects would be materially and adversely affected.

If the market for commercial EVs does not develop as REE expects or develops slower than REE expects, its business prospects, financial condition, and operating results may be adversely affected.

REE’s growth depends upon the adoption of EVs by original equipment manufacturers (“OEMs”), logistics companies and service providers and on REE’s ability to produce, assemble and sell products that meet their needs. The entry of EV products into the commercial EV market is a relatively new development and is characterized by rapidly changing technologies and evolving government regulation, industry standards and customer views of the merits of using EVs in their businesses. This process has been slow to date. As part of REE’s sales efforts, REE must educate OEMs, logistics companies and service providers as to the savings during the life of the vehicle and the lower total cost of ownership of vehicles built on the REE products. As such, REE believes that OEMs, logistics companies and service providers will

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consider many factors when deciding whether to purchase REE’s products (or EVs generally) over vehicles powered by internal combustion engines, particularly diesel-fueled or natural gas-fueled vehicles. REE believes these factors include:

•        the difference in the initial purchase prices of EVs with comparable vehicles powered by internal combustion engines, both including and excluding the effect of government and other subsidies and incentives designed to promote the purchase of EVs;

•        the total cost of ownership of the vehicle over its expected life, which includes the initial purchase price and ongoing operating and maintenance costs;

•        the availability and terms of financing options for purchases of vehicles and, for EVs, financing options for battery or fuel cell systems;

•        the availability of tax and other governmental incentives to purchase and operate EVs and future regulations requiring increased use of nonpolluting vehicles;

•        government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;

•        fuel prices, including volatility in the cost of diesel or a prolonged period of low gasoline and natural gas costs that could decrease incentives to transition to EVs;

•        the cost and availability of other alternatives to diesel fueled vehicles, such as vehicles powered by natural gas;

•        corporate sustainability initiatives;

•        EV quality, performance and safety (particularly with respect to lithium-ion battery packs or fuel cells);

•        the quality and availability of service for the vehicle, including the availability of replacement parts;

•        the limited range over which EVs may be driven on a single charge;

•        access to charging stations and related infrastructure costs, and standardization of EV charging systems;

•        electric grid capacity and reliability; and

•        macroeconomic factors.

If, in weighing these factors, OEMs, logistics companies and service providers determine that there is not a compelling business justification for purchasing EVs, particularly those built on the REE products, then the market for EVs may not develop as REE expects or may develop more slowly than REE expects, which would adversely affect REE’s business, prospects, financial condition and operating results.

In addition, any reduction, elimination or selective application of tax and other governmental incentives and subsidies because of policy changes, the reduced need for such subsidies and incentives due to the perceived success of the EV, fiscal tightening or other reasons may result in the diminished competitiveness of the EV industry generally or EVs built on the REE products in particular, which would adversely affect REE’s business, prospects, financial condition and operating results. Further, REE cannot assure that the current governmental incentives and subsidies available for purchasers of EVs will remain available.

Adverse conditions in the automotive industry could have adverse effects on REE’s results of operations.

REE’s business is directly affected by and significantly dependent on business cycles and other factors affecting the global automobile industry. 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 REE’s potential customers’ and potential suppliers’ and strategic partners’ ability to continue operating in response to challenging economic conditions and in response to regulatory requirements and other factors. The volume of global automotive production has fluctuated, sometimes

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significantly, from year to year, and REE 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 REE’s potential customers and potential suppliers and strategic partners and could have a material adverse effect on REE’s business, results of operations and financial condition.

REE’s future sales and operations in international markets may expose it to operational, financial and regulatory risks, including but not limited to unfavorable regulatory, political, tax and labor conditions which could negatively impact the business.

REE faces risks associated with its international operations, including possible unfavorable regulatory, political, tax and labor conditions, which could harm its business. REE has international operations and subsidiaries in Israel, the U.S., the UK and Germany that are subject to the legal, political, regulatory and social requirements and economic conditions in these jurisdictions. Additionally, as part of its growth strategy, REE intends to expand its manufacturing partnerships, assembly facilities and sales activity internationally. However, REE has no experience to date selling, manufacturing or assembling its products internationally and such expansion would require REE to make significant expenditures, including the hiring of local employees and establishing facilities, in advance of generating any revenue. REE is subject to a number of risks associated with international business activities that may increase its costs, impact its ability to sell its products and require significant management attention. These risks include:

•        conforming REE’s products to various international regulatory requirements where its products are sold, or homologation;

•        development and construction of its future integration center network;

•        difficulty in staffing and managing foreign operations;

•        difficulties attracting customers in new jurisdictions;

•        foreign government taxes, regulations and permit requirements, including foreign taxes that REE may not be able to offset against taxes imposed upon it in Israel, and foreign tax and other laws limiting REE’s ability to repatriate funds to Israel;

•        fluctuations in foreign currency exchange rates and interest rates, including risks related to any interest rate swap or other hedging activities REE undertakes;

•        Israel and foreign government trade restrictions, tariffs and price or exchange controls;

•        foreign labor laws, regulations and restrictions;

•        changes in diplomatic and trade relationships;

•        political instability, natural disasters, war or events of terrorism; and

•        the strength of international economies.

If REE fails to successfully address these risks, its business, prospects, operating results and financial condition could be materially harmed.

REE is subject to risks related to health epidemics and pandemics, including the ongoing COVID-19 pandemic, which could adversely affect REE’s business and operating results.

REE faces various risks related to public health issues, including epidemics, pandemics, and other outbreaks, including the ongoing COVID-19 pandemic. The effects and potential effects of COVID-19, including, but not limited to, its impact on general economic conditions, trade and financing markets, changes in customer behavior and continuity in business operations creates significant uncertainty. The spread of COVID-19 also disrupted the manufacturing, delivery and overall supply chain of vehicle manufacturers and suppliers, and has led to a global decrease in vehicle sales in markets around the world. In particular, the COVID-19 crisis may cause a decrease in demand for REE’s products if OEMs, logistics companies and service providers delay purchases of vehicles or if fuel prices for internal combustion engine vehicles remain low, an increase in costs resulting from REE’s efforts to mitigate the effects of COVID-19, delays in REE’s schedule to full commercial production of the REEcorner and disruptions to REE’s supply chain, among other negative effects.

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The pandemic has resulted in government authorities implementing many measures to contain the spread of COVID-19, including travel bans and restrictions, quarantines, shelter-in-place and stay-at-home orders, and business shutdowns. These measures may be in place for a significant period of time and may be reinstituted if conditions deteriorate, which could adversely affect REE’s start-up and manufacturing plans. Measures that have been relaxed may be reimplemented if COVID-19 continues to spread. If, as a result of these measures, REE has to limit the number of employees and contractors in REE facilities at a given time, it could cause a delay in retooling efforts or in the production schedule of the REEcorner. Further, REE’s sales and marketing activities may be adversely affected due to the cancellation or reduction of in-person sales activities, meetings, events and conferences. If REE’s workforce is unable to work effectively, including due to illness, quarantines, government actions or other restrictions in connection with COVID-19, REE’s operations will be adversely affected.

The extent to which the COVID-19 pandemic may continue to affect REE’s business will depend on continued developments, which are uncertain and cannot be predicted. Even after the COVID-19 pandemic has subsided, REE may continue to suffer an adverse effect to REE’s business due to its global economic effect, including any economic recession. If the immediate or prolonged effects of the COVID-19 pandemic have a significant adverse impact on government finances, it would create uncertainty as to the continuing availability of incentives related to EV purchases and other governmental support programs.

Risks Related to REE’s Strategy

REE’s business model has yet to be tested and any failure to commercialize its products could have an adverse effect on its operating results, business, or reputation, resulting in substantial liabilities that may exceed its resources.

REE strives to be the cornerstone upon which global mobility companies build any size or shape of electric car, van, or truck on a modular and scalable platform for various applications or target markets. REE believes that this approach will allow it to complete, and not compete with, other EV players such as vertically integrated OEMs, mobility and logistic players. REE plans to embrace traditional Tier 1 suppliers and their global manufacturing capacity, instead of directly competing with them. If REE is perceived to be a competitor by other EV players, REE may not be successful in its goal to complete rather than to compete. This approach depends in large part on REE’s ability to enter into definitive agreements that formalize its relationship with potential customers, suppliers and strategic partners. Investors should be aware of the difficulties normally encountered by a new enterprise, many of which are beyond REE’s control, including substantial risks and expenses in the course of establishing or entering new markets, organizing operations and undertaking marketing activities. The likelihood of REE’s success must be considered in light of these risks, expenses, complications, delays and the competitive environment in which REE operates. In addition, REE’s plan to outsource manufacturing to potential suppliers and strategic partners and to utilize future integration centers for the assembly of REE products is a novel business strategy and REE cannot guarantee that the strategy will be successful or profitable. REE may be unable to generate revenues, raise additional capital or operate profitably or to meet projected gross margins, EBITDA and cash flows. REE will continue to encounter risks and difficulties frequently experienced by early development stage companies, including scaling up REE’s infrastructure and headcount, and may encounter unforeseen expenses, difficulties or delays in connection with its growth. In addition, REE expects to continue to sustain substantial operating expenses without generating sufficient revenues to cover expenditures. Any investment in REE is therefore highly speculative and could result in the loss of your entire investment.

REE’s marketing and sales model is different from predominant and current models in the automobile industry, making evaluation of its business, operating results and future prospects difficult. Should such a model fail to achieve market acceptance, REE may not be able to achieve profitability.

REE plans to conduct product marketing and sales directly to OEMs, logistics companies and service providers by its internal business development and marketing teams. REE’s business development and marketing teams continue to focus on expanding relationships with OEMs, logistic and commercial players, mobility providers and e-commerce leaders and to expand its market to other industries. This marketing and sales model is different from the currently predominant marketing and sales model for automobile manufacturers, which makes evaluating its business, operating results and future prospects difficult. This model of product marketing and sale is relatively new and, with limited exceptions, unproven. For example, REE will not be able to utilize long established sales channels developed through a franchise system to increase sales volume. REE’s success will depend in large part on its ability to effectively develop its own distribution channels and marketing strategies. If REE is unable to achieve this, it could have a material adverse effect on its business, prospects, financial results and results of operations.

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REE’s agreements with potential customers, potential suppliers and potential strategic partners are preliminary in nature.

All of REE’s existing agreements with potential customers, potential suppliers and potential strategic partners are pursuant to MOUs or strategic, alliance and development agreements. Such strategic collaborations are generally non-binding and subject to cancellation or require the achievement of development milestones as a precursor to entering into a further definitive agreement. There can be no guarantee that any of REE’s strategic collaborations would lead to any definitive agreements or lasting or successful business relationships with such potential customers, potential suppliers or potential strategic partners and failure to do so would have a material adverse effect on its business, prospects, financial results and results of operations.

REE may not succeed in establishing, maintaining and strengthening the “Powered by REE” brand, which could materially and adversely affect customer acceptance of its vehicles and components, thus negatively impacting its business, prospects and projected revenue.

REE intends to market its products as both individual products or as a full vehicle solution under the “Powered by REE” brand. The “Powered by REE” approach reflects REE’s mission to become the cornerstone upon which mobility players can build their mission-specific vehicle needs with the goal of completing rather than competing with other market participants. REE’s business and prospects are heavily dependent on its ability to develop, maintain and strengthen the “Powered by REE” brand and the REE brand generally. If REE does not continue to establish, maintain and strengthen its brand, it may lose the opportunity to build a critical mass of customers. Promoting and positioning its brand will likely depend significantly on REE’s ability to provide high quality products and engage with its potential customers as intended, and REE has limited experience in these areas. In addition, REE’s ability to develop, maintain and strengthen the “Powered by REE” brand and the REE brand generally will depend heavily on the success of its customer development and branding efforts. REE’s novel technology and design may not align with existing consumer preferences and consumers may be reluctant to acquire a vehicle build upon a new and unproven EV platform. In addition, REE could be subject to adverse publicity related to REE’s potential customers who build vehicles on REEplatforms whether or not such publicity related to such potential customers’ “Powered by REE” vehicles; given the popularity of social media, any negative publicity, whether true or not, could quickly proliferate and harm consumer perceptions and confidence in the “Powered by REE” brand and the REE brand generally. If REE does not develop and maintain a strong brand, its business, prospects, financial condition and operating results will be materially and adversely impacted.

REE will be subject to risks associated with strategic alliances.

If REE is successful in entering into definitive agreements with potential suppliers or potential strategic partners the resulting alliances will subject us to a number of risks, including risks associated with non-performance by the third party and sharing proprietary information, any of which may materially and adversely affect REE’s business and prospects. REE’s limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, REE may also suffer negative publicity or harm to its reputation by virtue of its association with any such third party.

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

Both the automobile industry generally, and the EV segment in particular, are highly competitive, and REE will be competing for sales with both internal combustion engine (“ICE”) vehicles and EVs. Many of REE’s current and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than REE does and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their products. REE expects competition for EVs to intensify due to increased demand and a regulatory push for alternative fuel vehicles, continuing globalization, and consolidation in the worldwide automotive industry. Factors affecting competition include product quality and features, innovation and development time, pricing, reliability, safety, fuel economy, customer service, and financing terms. Increased competition may lead to lower vehicle unit sales and increased inventory, which may result in downward price pressure and adversely affect REE’s business, financial condition, operating results, and prospects.

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REE’s products will compete for market share with vehicles powered by other vehicle technologies that may prove to be more attractive than that of REE. Such competition may ultimately impair REE’s business and revenue.

REE’s target market currently is serviced by manufacturers with existing customers and suppliers using proven and widely accepted fuel technologies. Additionally, REE’s competitors are working on developing technologies that may be introduced in REE’s target market. If any of these alternative technology vehicles can provide lower fuel costs, greater efficiencies, greater reliability or otherwise benefit from other factors resulting in an overall lower total cost of ownership, this may negatively affect the commercial success of REE’s products or make REE’s products uncompetitive or obsolete.

REE may not be able to compete successfully in the market as a result of rapid changes in EV technology and the entrance of new and existing, larger manufacturers into the EV space.

REE’s products are being designed for use with, and depend upon, existing vehicle technology. As new companies and larger, existing vehicle manufacturers enter the EV space, REE may lose any technological advantage it may have had in the marketplace and suffer a decline in its position in the market. As technologies change, REE plans to upgrade or adapt its products to continue to provide products with the latest technology. However, REE’s products may become obsolete or REE’s research and development efforts may not be sufficient to adapt to changes in or to create the necessary technology to effectively compete. As a result, REE’s potential inability to adapt and develop the necessary technology may harm REE’s competitive position.

Risks Related to Development and Production of REE’s Products

REE’s products are currently in development and there are risks associated with developing existing advanced prototypes into marketable products.

REE’s products are currently in development and are in a prototype stage. In order to reach the production stage REE’s products remain subject to further design, validation, verification and testing, as well as product homologation. There is no guarantee that REE will be successful in developing the prototypes into final marketable products on the projected timeline, or at all. As of now, REE has been able to perform only limited testing of REE’s products, largely as a result of a lack of dedicated testing facilities. The establishment of the Engineering Center of Excellence at the MIRA Technology Park in the UK is expected to provide REE with access to world-class test facilities and a proving ground for physical testing and validation of the REE products. However, there can be no guarantee that the testing of REE’s products will proceed according to schedule or that the REE products will withstand rigorous testing. The development of REE’s advanced prototypes into final marketable products is and will be subject to risks including, but not limited to, with respect to:

•        REE’s ability to validate final marketable products that are capable of supporting Class 1 through Class 6 platform models as currently projected;

•        REE’s ability to completely the final marketable product design process on time, if at all;

•        REE’s ability to produce design drawings in order to allow potential suppliers and potential strategic partners to prepare for and begin manufacture of REE products on time, if at all;

•        the ability for REE’s prototype to meet the stringent level of safety measures required by ASIL D;

•        REE’s ability to obtain ASPICE CL2 certification;

•        the ability for REE’s prototypes to withstand rigorous testing and validation;

•        the ability for REE’s prototypes to satisfy testing and validation standards set by external assessors;

•        the ability of REE’s prototypes to meet existing or future automotive industry standards;

•        REE’s ability to successfully develop and validate true X-by-Wire Control capabilities compatible with Class 1 through Class 6 platform models as currently projected; and

•        the ability of X-by-Wire Control technology to obtain regulatory approval and achieve widespread market acceptance.

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REE is subject to risks associated with REE’s anticipated initial commercial production in 2022 and subsequent increased commercial production in 2023.

REE is currently targeting initial commercial production of its products in 2022. REE does not know whether its potential suppliers or strategic partners will be able to develop efficient, automated, low-cost production capabilities and processes and reliable sources of component supply, that will enable REE to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully mass market REE’s products. Even if REE and its potential suppliers and strategic partners are successful in developing its initial production and further high volume production capability and processes and reliably source its component supply, REE does not know whether it will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond its control such as problems with potential suppliers and strategic partners, or force majeure events, or in time to meet REE’s products commercialization schedules or to satisfy the requirements of it potential customer base. Any failure to develop such production processes and capabilities within REE’s projected costs and timelines could have a material adverse effect on its business, prospects, financial condition and operating results.

REE’s development of an outsourced manufacturing business model may not be successful, which could harm its ability to deliver products and recognize revenue.

REE’s business depends in large part on its ability to develop, manufacture and assemble its products. Initially, REE plans to outsource the manufacturing of its products in collaboration with one or more potential suppliers and potential strategic partners, including Tier 1 automotive suppliers. REE plans to assemble its products at REE’s future integration centers. REE has not yet executed definitive supply or manufacturing agreements with potential suppliers and potential strategic partners for production of REE’s products or any of its other future product offerings. See “REE’s Business — REE’s Manufacturing Approach” for more information. If REE is unable to negotiate and finalize such definitive agreements it will not be able to produce any products and will not be able to generate any revenue, or the products may become more expensive to deliver with a higher bill of materials, which would have a material adverse effect on its business, prospects, operating results and financial condition. In addition, the utilization of future integration centers for the assembly of REE products is an untested business strategy and there is no guarantee that the strategy will be successful or profitable.

If REE’s potential suppliers and strategic partners were to experience delays, disruptions, capacity constraints or quality control problems in its manufacturing operations, product shipments could be delayed or rejected or REE’s potential customer base could consequently elect to change product demand. These disruptions would negatively impact REE’s revenues, competitive position and reputation. In addition, REE’s potential suppliers and strategic partners may rely on certain state tax incentives that may be subject to change or elimination in the future, which could result in additional costs and delays in production if a new manufacturing site must be obtained. Further, if REE is unable to manage successfully its relationship with its potential suppliers and strategic partners, the quality and availability of its products may be harmed. REE’s potential suppliers and strategic partners could, under some circumstances, decline to accept new purchase orders from or otherwise reduce their business with REE. If REE’s potential suppliers and strategic partners stopped manufacturing REE’s products for any reason or reduced manufacturing capacity, REE may be unable to replace the lost manufacturing capacity on a timely and comparatively cost-effective basis, which would adversely impact its operations.

REE’s reliance on its potential suppliers and strategic partners, as well as the establishment and operation of REE’s future integration centers, exposes it to a number of risks which are outside its control, including with respect to:

•        the manufacture of certain components will require significant costs related to non-recurring engineering and tooling costs incurred by REE’s potential suppliers and strategic partners the extent of which is currently unknown;

•        unexpected increases in manufacturing costs;

•        interruptions in shipments if a potential suppliers or strategic partners are unable to complete production in a timely manner;

•        inability to control quality of finished products;

•        inability to control delivery schedules;

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•        inability to control production levels and to meet minimum volume commitments to REE’s potential customer base;

•        inability to control manufacturing yield;

•        inability to maintain adequate manufacturing capacity;

•        inability to secure adequate volumes of acceptable components at suitable prices or in a timely manner;

•        inability to establish new integration centers at the projected cost of $15 million per integration center;

•        inability to accurately assemble products within specified design tolerances;

•        delays by REE in delivering final component designs to its potential suppliers and strategic partners;

•        inability to implement a sufficient number of future integration centers in order to meet demand for REE products in time;

•        inability to implement a network of future integration;

•        inability to effectively manage a global network of integration centers; and

•        other delays, backlog in manufacturing and research and development of new models, and cost overruns.

REE’s ability to develop, manufacture and obtain required regulatory approvals for products of sufficient quality and appeal to its potential customer base on schedule and on a large scale is unproven, and the business plan is still evolving. REE may be required to introduce new products models and enhanced versions of existing models. To date, REE has limited experience, as a company, designing, testing, manufacturing, marketing and selling or leasing its electric products and therefore cannot assure you that it will be able to meet customer expectations. Any failure to develop such manufacturing processes and capabilities within REE’s projected costs and timelines would have a material adverse effect on its business, prospects, operating results and financial condition.

REE does not currently have any plans to establish manufacturing facilities of its own so failure to establish sufficient agreements with potential suppliers and strategic partners would significantly hinder REE’s ability to manufacture its products. In addition, the manufacturing facilities of REE’s potential suppliers and strategic partners may be harmed or rendered inoperable by natural or man-made disasters, including earthquakes, flooding, fire and power outages, or by health epidemics, such as the recent COVID-19 pandemic, which may render it difficult or impossible for REE to manufacture its products for some period of time. The inability to manufacture REE’s products or the backlog that could develop if the manufacturing facilities of its potential suppliers and strategic partners are inoperable for even a short period of time may result in the loss of potential customers or harm REE’s reputation.

REE is reliant on its UK Engineering Center of Excellence for the design, validation, verification, testing and homologation of its products.

On February 16, 2021, REE announced the establishment of a new UK Engineering Center of Excellence at the MIRA Technology Park in the UK (the “Engineering Center”). The new Engineering Center is intended to expedite REE’s strategic plans to meet anticipated global demand. The Engineering Center will spearhead REE product design, validation, verification and testing, as well as product homologation. REE will also have access to world-class test facilities and a proving ground for physical testing and validation of the REE products at the Engineering Center. The Engineering Center, and the facilities available therein, will be integral to REE’s ability to develop its advanced prototypes into marketable products. Any loss of access or disputes related to the Engineering Center have the potential to adversely impact REE’s ability to develop its advanced prototypes into marketable products on time to meet commercialization timeline, or at all.

REE’s utilization of its Engineering Center is and will be subject to risks, including with respect to:

•        REE’s ability to maintain arrangements on reasonable terms with third parties for the provision of testing facilities and testing services with respect to REE products;

•        REE’s ability to maintain the lease on reasonable terms and associated risks related to disputes involving the lessor of the Engineering Facility;

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•        REE’s ability to attract, recruit, hire, retain and train a sufficient number of skilled employees to effectively staff the Engineering Center;

•        REE’s reliance on outside contractors for the provision of certain services and associated risks related to monitoring and protecting IP, contractual disputes and certain inherent cybersecurity risks;

•        Potential future changes of control resulting from a sale of the MIRA Technology Park or resulting from a bankruptcy proceeding with respect to MIRA; and

•        Limited availability of testing facilities when required for validation, verification and testing of REE products resulting from the shared nature of the MIRA Technology Park and inherent delays related thereto.

The testing facilities available to REE at the Engineering Center would be costly to replace and could require substantial lead time to replace and qualify for use. The testing facilities may be harmed or rendered inoperable by natural or man-made disasters, including earthquakes, flooding, fire and power outages, or by health epidemics, such as the recent COVID-19 pandemic, which may render it difficult or impossible for REE to validate, verify and test REE products for some period of time. The inability to validate, verify and test REE products or the resulting delay to REE’s commercialization schedule if the testing facilities are inoperable for even a short period of time may result in the loss of potential customers or harm REE’s reputation.

Technology in the automotive industry is rapidly evolving and developments in alternative technologies, including but not limited to hydrogen, may adversely affect the demand for REE’s products. Such unforeseen developments in technology may adversely affect market adoption of REE’s current products or future product developments.

REE may be unable to keep up with changes in EV technology or alternatives to electricity as a fuel source and, as a result, its competitiveness may suffer. Developments in alternative technologies, such as advanced diesel, ethanol, hybrids, fuel cells, or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect REE’s business and prospects in ways REE does not currently anticipate. Any failure by REE to successfully react to changes in existing technologies could materially harm its competitive position and growth prospects.

REE’s products may make use of lithium-ion battery cells, which can be dangerous in certain circumstances, including but not limited to the possibility that such cells may catch fire or vent smoke and flame.

The fuel source for REE products may make use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. While REE has taken measures to enhance the safety of its designs, a field or testing failure of its products could occur in the future, which could subject REE to lawsuits, product recalls, or redesign efforts, all of which would be time-consuming and expensive. Also, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications or any future incident involving lithium-ion cells such as a vehicle or other fire, even if such incident does not involve REE’s products, could seriously harm its business.

In addition, REE’s potential suppliers and strategic partners are expected to store a significant number of lithium-ion cells at their facilities. Any mishandling of battery cells may cause disruption to the operation of such facilities. A safety issue or fire related to the cells could disrupt operations or cause manufacturing delays. Such damage or injury could lead to adverse publicity and potentially a safety recall. Moreover, any failure of a competitor’s EV or energy storage product may cause indirect adverse publicity for REE and its products. Such adverse publicity could negatively affect REE’s brand and harm its business, prospects, financial condition and operating results.

The efficiency of battery usage in EVs declines over time, which may negatively impact potential customers’ decisions with regards to purchasing REE’s products.

REE anticipates that the range of its products will decline over time as the batteries deteriorate. REE currently expects a 3% to 4% decline in the battery life per year, which will decrease the range of its products over five years by approximately 20%. Other factors such as usage, time and stress patterns may also impact the battery’s ability to hold a charge, which would decrease REE’s products’ range before needing to refuel. Such battery deterioration and the related decrease in range may negatively influence potential customer decisions, which would negatively affect REE’s operating results and financial condition.

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Risks Related to REE’s Potential Suppliers

REE’s growth depends upon REE’s ability to develop and maintain relationships with its potential suppliers, such as source suppliers for critical components, and the completion of its supply chain while effectively managing the risks of to such relationships.

REE has entered into a number of MOUs and strategic, alliance and development agreements with certain strategic partners pursuant to which the parties are entering into discussions to evaluate or agree upon a development and strategic plan. REE has not yet entered into any definitive agreements pursuant to which any potential suppliers or strategic partners will produce REE’s products. In order to implement its business model requiring limited capital expenditures, REE will need to enter into definitive agreements with one or more potential suppliers and strategic partners in order to produce REE’s products in a manner contemplated by its business plan. Furthermore, REE has explored and intends to secure alternative suppliers and strategic partners for many of the most material aspects of its business model.

Collaboration with potential suppliers and strategic partners for the manufacturing of REE products is subject to risks with respect to operations that are outside REE’s control. REE could experience delays to the extent its potential suppliers or strategic partners do not continue doing business with REE, meet agreed upon timelines, experience capacity constraints or otherwise are unable to deliver components or manufacture products as expected. There is risk of disputes with potential suppliers and strategic partners, and REE could be affected by adverse publicity related to its potential suppliers or strategic partners whether or not such publicity is related to their collaboration with REE. REE’s ability to successfully build a premium brand could also be adversely affected by perceptions about the quality of REE’s potential suppliers or strategic partner’s products or other products manufactured by the same potential suppliers or strategic partners. In addition, although REE intends to be involved in material decisions in the supply chain and manufacturing process, given that REE also will rely on its potential suppliers and strategic partners to meet its quality standards, there can be no assurance that REE will be able to maintain high quality standards.

REE will depend on its potential suppliers, including but not limited to body manufacturers and battery providers, some of which will be single or limited source suppliers, and the inability of such suppliers to deliver the components of REE’s products in a timely manner or at all and at prices and volumes acceptable to it could have a material adverse effect on its business, prospects and operating results.

REE will rely on potential suppliers and strategic partners for the provision and development of many of the components and materials used in its products. While REE plans to obtain components from multiple sources whenever possible, some of the components used in its products are expected to be purchased by REE from a single source. REE’s potential suppliers and strategic partners may not be able to meet their product specifications and performance characteristics, which would impact REE’s ability to achieve its product specifications and performance characteristics as well. Additionally, REE’s potential suppliers and strategic partners may be unable to obtain required certifications for their products for which REE plans to use or provide warranties that are necessary for REE’s solutions. If REE is unable to obtain components and materials used in its products from its potential suppliers or if its potential suppliers decide to create or supply a competing product, REE’s business could be adversely affected. REE has less negotiating leverage with potential suppliers than larger and more established automobile manufacturers and may not be able to obtain favorable pricing and other terms. While REE believes that it may be able to establish alternate supply relationships and can obtain or engineer replacement components for its single source components, REE may be unable to do so in the short term, or at all, at prices or quality levels that are favorable to REE, which could have a material adverse effect on its business, prospects, financial condition and operating results.

REE expects to purchase various types of equipment, raw materials and manufactured component parts from its potential suppliers or strategic partners. If these potential suppliers or strategic partners experience substantial financial difficulties, cease operations, or otherwise face business disruptions, REE may be required to provide substantial financial support to ensure supply continuity or would have to take other measures to ensure components and materials remain available. Any disruption could affect’s REE’s ability to deliver products and could increase REE’s costs and negatively affect its liquidity and financial performance.

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REE’s business could be harmed by increases in costs, disruption of supply or shortage of materials, in particular for lithium-ion battery cells.

REE and its potential suppliers may experience increases in the cost of or a sustained interruption in the supply or shortage of materials. Any such increase, supply interruption or shortage could materially and negatively impact REE’s business, prospects, financial condition and operating results. REE and its potential suppliers will use various materials in their businesses and products, including for example lithium-ion battery cells and steel, and the prices for these materials fluctuate. The available supply of these materials may be unstable, depending on market conditions and global demand, including as a result of increased production of EVs by REE’s competitors, and could adversely affect REE’s business and operating results.

Risks Related to REE’s Future Sales

Although REE has projected unit sales based on assessment of strategic collaborations and with the possibility of sales to potential partners, considering a range of assumptions, REE has not entered into any definitive purchase agreements with potential customers.

As set forth in “Proposal No. 1 — The Merger Proposal — Certain Unaudited Prospective Financial Information of REE,” REE has projected unit sales of approximately 737,000 REE platforms through the end of 2026, of which 260,000 platforms are represented by references to vehicles to be co-developed in the coming years by REE and its strategic partners in signed strategic collaborations. REE’s projections are based on REE’s assessment of such strategic collaborations and the possibility of sales to potential partners, considering a range of assumptions including, but not limited to, volumes, timelines, average selling prices, the development and commercialization of REE’s products, potential market and sector opportunities, the roll out of REE’s future integration centers locations, the production capacity of REE’s future integration centers, the selection of REE’s products by customers and by segment, and growth in the various markets REE is targeting, and it is possible that a significant number of potential customers will ultimately not execute definitive purchase agreements. While REE believes the strategic collaborations support REE’s potential growth trajectory, such strategic collaborations generally are non-binding and certain of the strategic collaborations may be terminated for convenience by either party. REE’s strategic collaborations generally do not set forth specific development timeframes or represent a commitment by either party to develop, produce or deliver REE’s products. Additionally, the projected unit sales do not represent sales or purchase obligations unless and until definitive purchase agreements are signed. Given the anticipated lead times that may occur before production and delivery of REE’s products, there is a heightened risk that potential customers may not execute definitive purchase agreements due to potential changes in customer preferences, competitive developments and other factors. As a result, no assurance can be made that REE’s projections of unit sales will reflect the actual sale of REE products in the future. Any deviation from REE’s projections could harm REE’s financial condition, business, prospects and operating results. For additional information regarding the assumptions underlying REE’s projected unit sales, see “Proposal No. 1 — The Merger Proposal — Certain Unaudited Prospective Financial Information of REE.”

REE currently targets potential customers that are large corporations with substantial negotiating power, exacting product, quality and warranty standards and potentially competitive internal solutions.

Many of REE’s potential customers are large, multinational corporations with substantial negotiating power relative to it and, in some instances, that may have internal solutions that are competitive to REE’s products. These large, multinational corporations also have significant development resources, which may allow them to acquire or develop independently, or in partnership with others, competitive technologies. Meeting the technical requirements and securing design wins with any of these companies will require a substantial investment of REE’s time and resources. REE cannot assure you that its products will secure design wins from these or other companies or that it will generate meaningful revenue from the sales of its products to these key potential customers. If REE’s products are not selected by these large corporations or if these corporations develop or acquire competitive technology, it will have an adverse effect on REE’s business. In addition, if REE is unable to sell its products to such potential customers on certain terms, its prospects and results of operations may be adversely affected.

Discontinuation, lack of commercial success, or loss of business with respect to a particular product model for which REE is a significant supplier could reduce REE’s sales and adversely affect its profitability.

If REE is able to secure design wins and its REE products are included in these EV products, it expects to enter into supply agreements with the relevant customers. Market practice dictates that these supply agreements typically require REE to supply a customer’s requirements for a particular vehicle model or product. These contracts can have short

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terms and/or can be subject to renegotiation, sometimes as frequently as annually, all of which may affect product pricing, and may be terminated by REE’s potential customers at any time. Therefore, even if REE is successful in obtaining design wins and the systems into which its products are built are commercialized, the discontinuation of, the loss of business with respect to, or a lack of commercial success of a particular vehicle model for which REE is a significant supplier could mean that the expected sales of REE’s products will not materialize, materially and adversely affecting its business.

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 REE’s business.

Cost-cutting initiatives adopted by REE’s potential customer base often result in increased downward pressure on pricing. REE expects that its future agreements with automotive OEMs may require step-downs in pricing over the term of the agreement or, if commercialized, over the period of production. In addition, REE’s automotive OEM customers are expected to 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 REE, because the automotive component supply industry is highly competitive, serves a limited number of customers and has a high fixed cost base. Accordingly, REE 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 REE’s expectations could intensify as automotive OEMs pursue restructuring, consolidation and cost- cutting initiatives. If REE is unable to generate sufficient production cost savings in the future to offset price reductions, its gross margin and profitability would be adversely affected.

The average selling prices of REE’s products could decrease rapidly over the life of the products, which may negatively affect REE’s revenue and gross margin.

REE expects the average selling prices of its products generally to decline as its potential customer base seeks to commercialize EVs built on the REE products at prices low enough to achieve market acceptance. In order to sell products that have a falling average unit selling price and maintain margins at the same time, REE will need to continually reduce products and manufacturing costs. To manage manufacturing costs, REE must engineer the most cost-effective design for its products. In addition, REE will continuously drives initiatives to reduce labor cost, improve worker efficiency, reduce the cost of materials, use fewer materials and further lower overall product costs by carefully managing component prices, inventory and shipping cost. REE also needs to continually introduce new products with higher sales prices and gross margin in order to maintain its overall gross margin. If REE is unable to manage the cost of older products or successfully introduce new products with higher gross margin, its revenue and overall gross margin would likely decline.

Risks Related to REE’s Quality

REE’s products rely on software and hardware that is highly technical, and if these systems contain errors, bugs or vulnerabilities, or if REE is unsuccessful in addressing or mitigating technical limitations in its systems, REE’s business could be adversely affected.

REE’s products rely on software and hardware that is highly technical and complex and will require modification and updates over the life of the products. In addition, REE’s products depend on the ability of such software and hardware to store, retrieve, process and manage immense amounts of data. REE’s software and hardware may contain, errors, bugs or vulnerabilities, and REE’s systems are subject to certain technical limitations that may compromise REE’s ability to meet its objectives. Some errors, bugs or vulnerabilities inherently may be difficult to detect and may only be discovered after the code has been released for external or internal use. Errors, bugs, vulnerabilities, design defects or technical limitations may be found within REE’s software and hardware. Although REE attempts to remedy any issues it observes in its products as effectively and rapidly as possible, such efforts may not be timely, may hamper production or may not be to the satisfaction of REE’s potential customer base. Additionally, if REE is able to deploy updates to the software addressing any issues but REE’s over-the-air update procedures fail to properly update the software, REE’s potential customer base would then be responsible for installing such updates to the software and their software will be subject to these vulnerabilities until they do so. If REE is unable to prevent or effectively remedy errors, bugs, vulnerabilities or defects in its software and hardware, REE may suffer damage to its reputation, loss of customers, loss of revenue or liability for damages, any of which could adversely affect REE’s business and financial results.

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REE may become subject to product liability claims, which could harm its financial condition and liquidity if it is not able to successfully defend or insure against such claims.

REE may become subject to product liability claims, even those without merit, which could harm its business, prospects, operating results, and financial condition. The automobile industry experiences significant product liability claims and REE faces inherent risk of exposure to claims in the event its products do not perform as expected or malfunction resulting in personal injury or death. REE’s risks in this area are particularly pronounced given it has limited field experience of its products. A successful product liability claim against REE could require REE to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about REE’s products and business and inhibit or prevent commercialization of other future product candidates, which would have a material adverse effect on REE’s brand, business, prospects and operating results. Any insurance coverage might not be sufficient to cover all potential product liability claims. Any lawsuit seeking significant monetary damages either in excess of REE’s coverage, or outside of REE’s coverage, may have a material adverse effect on REE’s reputation, business and financial condition. REE may not be able to secure additional product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if it does face liability for its products and are forced to make a claim under its policy.

REE does not currently have experience servicing its products. If REE is unable to address the service requirement of its potential customer base, its business may be materially adversely affected.

REE plans to work with strategic partners to provide predictive maintenance scheduling through smart service and maintenance AI in combination with over-the-air updates that seek to ensure maintenance is not performed on a standard schedule, but rather before a part will fail, which is expected to offer significant savings for unnecessary part replacements and drastically reduce downtime. There is no guarantee that REE will be successful in developing the necessary technology to actualize predictive maintenance scheduling. In addition, REE servicing may primarily be carried out through third parties certified by REE. Although such potential servicing partners may have experience in servicing other products, they will initially have limited experience in servicing REE products. There can be no assurance that REE service arrangements will adequately address the service requirements of its potential customer base to their satisfaction, or that REE and its potential servicing partners will have sufficient resources to meet these service requirements in a timely manner as the volume of products REE deliver increases. In addition, if REE is unable to roll out and establish a widespread service network that complies with applicable laws, user satisfaction could be adversely affected, which in turn could materially and adversely affect REE’s reputation and thus its sales, results of operations, and prospects.

REE may be subject to risks associated with autonomous driving and EV technology, including but not limited to technical malfunctions, regulatory obstacles, and/or product liability.

REE’s products are being designed to be compatible with autonomous control. Autonomous driving technologies are subject to risks and there have been accidents and fatalities associated with such technologies. The safety of such technologies depends in part on user interaction and users, as well as other drivers on the roadways, may not be accustomed to using or adapting to such technologies. To the extent accidents associated with REE’s products that are used with autonomous controls occur, REE could be subject to liability, negative publicity, government scrutiny and further regulation. Any of the foregoing could materially and adversely affect REE’s results of operations, financial condition and growth prospects.

Autonomous driving technology is also subject to considerable regulatory uncertainty as the law evolves to catch up with the rapidly evolving nature of the technology itself, all of which are beyond REE’s control. REE’s products also may not achieve the requisite level of autonomous compatibility required for certification and rollout to consumers or satisfy changing regulatory requirements which could require REE to redesign, modify or update its products.

Risks Related to REE’s Employees

REE is dependent on its founders Daniel Barel and Ahishay Sardes.

REE is dependent on the services of Daniel Barel, its co-founder, director and Chief Executive Officer, and Ahishay Sardes, its co-founder and Chief Technology Officer. Mr. Barel and Mr. Sardes are significant influences and drivers of REE’s business plan. If Mr. Barel or Mr. Sardes were to discontinue their service to REE due to death, disability or any other reason, REE would be significantly disadvantaged.

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REE’s success depends, in part, on its ability to attract and recruit key employees and hire qualified management, technical and vehicle engineering personnel.

REE’s success depends, in part, on its ability to retain its key personnel. The unexpected loss of or failure to retain one or more of its key employees could adversely affect its business. REE’s success also depends, in part, on its continuing ability to identify, hire, attract, train and develop other highly qualified personnel. Because REE’s products are based on different technology than traditional internal combustion engines, individuals with sufficient training in alternative fuel, technology or EVs may not be available, and as a result, REE will need to expend significant time and expense training the employees it hires. Competition for individuals with experience designing, manufacturing and servicing EVs or their related technology, parts and products is intense, and REE may not be able to attract, integrate, train, motivate or retain additional highly qualified personnel in the future. The failure to attract, integrate, train, motivate and retain these additional employees could materially adversely harm its business and prospects.

REE’s business may be adversely impacted by the labor and union activities of its own employees, as well of those of any of its potential affiliates, business partners, suppliers, or otherwise related entities.

Although none of REE’s employees are currently represented by a labor union, it is common throughout the automobile industry generally for many employees at automobile companies to belong to a union, which can result in higher employee costs and increased risk of work stoppages. REE may also directly and indirectly depend upon other companies with unionized work forces, such as parts suppliers and trucking and freight companies, and work stoppages or strikes organized by such unions could have a material adverse impact on REE’s business, financial condition or operating results.

Risks Related to REE’s Finances

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

Since inception, REE has incurred, and REE expects in the future while REE grows to incur, losses and negative cash flow, either or both of which may be significant. The working capital funding necessary to start a new EV product manufacturing company is significant, and other companies have tried and failed over the last several years with billions of investment capital. While REE expects to benefit from its management’s experience, the technology it has developed to date, and the advantages offered by its Engineering Center, REE does not expect to be profitable in the near term as REE invests in its business, builds capacity and ramps up operations, and REE cannot assure you that REE will ever achieve or be able to maintain profitability in the future. Failure to become profitable may materially and adversely affect the value of your investment. If REE is ever to achieve profitability, it will be dependent upon the successful development and commercial introduction and acceptance of EV products like the REEcorner, which may not occur.

Financial results may vary significantly from period to period due to fluctuations in REE’s operating costs and other factors, which may or may not be foreseeable.

REE expects its period-to-period financial results to vary based on its operating costs, which REE anticipates will fluctuate as the pace at which it continues to design, develop and produce new products and increase production capacity. Additionally, REE’s revenues from period to period may fluctuate as it develops and introduces new products or introduces existing products to new markets for the first time. As a result of these factors, REE believes that quarter-to-quarter comparisons of its financial results, especially in the short term, are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of future performance. Moreover, REE’s financial results may not meet expectations of equity research analysts, ratings agencies or investors, who may be focused only on quarterly financial results. If any of this occurs, the trading price of REE Class A Ordinary Shares could fall substantially, either suddenly or over time.

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REE may not be able to accurately estimate the supply and demand of its products, which could result in a variety of inefficiencies in its business and hinder its ability to generate revenue. If REE fails to accurately predict its manufacturing requirements, it could incur additional costs or experience delays.

It is difficult to predict REE’s future revenues and appropriately budget for its expenses, and REE may have limited insight into trends that may emerge and affect its business. REE expects that it will be required to provide forecasts of its demand to its potential suppliers several months prior to the scheduled delivery of products to its prospective customers. Currently, there is no historical basis for making judgments on the demand for REE’s products or its ability to develop, produce, and deliver products, or REE’s profitability in the future. If REE overestimates its requirements, its potential suppliers may have excess inventory, which indirectly would increase REE’s costs. If REE underestimates its requirements, its potential suppliers may have inadequate inventory, which could interrupt manufacturing of its products and result in delays in shipments and revenues. In addition, lead times for materials and components that REE’s potential suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. If REE fails to order sufficient quantities of product components in a timely manner, the delivery of products to its potential customer base could be delayed, which would harm REE’s business, financial condition and operating results.

REE will need to improve its operational and financial systems to support its expected growth, increasingly complex business arrangements and rules governing revenue and expense recognition and any inability to do so will adversely affect REE’s billing and reporting.

To manage the expected growth of its operations and increasing complexity, REE will need to improve its operational and financial systems, procedures, and controls and continue to increase systems automation to reduce reliance on manual operations. Any inability to do so will affect REE’s billing and reporting. REE’s current and planned systems, procedures and controls may not be adequate to support its complex arrangements and the rules governing revenue and expense recognition for its future operations and expected growth. Delays or problems associated with any improvement or expansion of REE’s operational and financial systems and controls could adversely affect REE’s relationships with its potential customer base, cause harm to its reputation and brand and could also result in errors in its financial and other reporting.

REE may need to raise additional funds and these funds may not be available to it when it needs them, or may only be available on unfavorable terms. As a result, REE may be unable to meet its future capital requirements, which could limit its ability to grow and jeopardize its ability to continue its business operations.

In the future, REE may require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and it may determine to engage in equity or debt financings or enter into credit facilities for other reasons. In order to further business relationships with its potential customer base or partners, REE may issue equity or equity-linked securities to potential customers or partners. REE may not be able to timely secure additional debt or equity financing on favorable terms, or at all. If REE raises additional funds through the issuance of equity or convertible debt or other equity-linked securities or if it issues equity or equity-linked securities to potential customers to further business relationships, its existing stockholders could experience significant dilution. Any debt financing obtained by REE in the future could involve restrictive covenants relating to its capital raising activities and other financial and operational matters, which may make it more difficult for REE to obtain additional capital and to pursue business opportunities, including potential acquisitions. If REE is unable to obtain adequate financing or financing on terms satisfactory to REE, when REE requires it, REE’s ability to continue to grow or support its business and to respond to business challenges could be significantly limited. These same risks will apply to the post-combination company following the Closing of the Merger.

REE’s insurance strategy may not be adequate to protect it from all liabilities business risks.

In the ordinary course of business, REE may be subject to losses resulting from products liability, accidents, acts of God and other claims against REE, for which REE may have no insurance coverage. While REE currently carries commercial general liability, workers’ compensation and directors’ and officers’ insurance policies, REE may not maintain as much insurance coverage as other EV market participants do, and in some cases, REE may not maintain any at all. Additionally, the policies that REE does have may include significant deductibles, and REE cannot be

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certain that its insurance coverage will be sufficient to cover all future claims against REE. A loss that is uninsured or exceeds policy limits may require REE to pay substantial amounts, which could adversely affect REE’s financial condition and operating results.

The successful assertion of one or more large claims against REE that exceeds its available insurance coverage, or results in changes to its insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on its business. In addition, REE cannot be sure that its existing insurance coverage will continue to be available on acceptable terms or that REE’s insurers will not deny coverage as to any future claim.

Risks Related to Being a Public Company

REE’s management has limited experience operating a public company, and thus its success in such endeavors cannot be guaranteed.

REE’s executive officers have limited experience in the management of a publicly traded company. REE’s management team may not successfully or effectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the post-combination company. REE may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal control over financial reporting required of public companies in the U.S. REE is in the process of upgrading its finance and accounting systems to an enterprise system suitable for a public company, and a delay could impact its ability or prevent it from timely reporting its operating results, timely filing required reports with the SEC and complying with Section 404 of the Sarbanes-Oxley Act. The development and implementation of the standards and controls necessary for REE to achieve the level of accounting standards required of a public company in the U.S. may require costs greater than expected. It is possible that REE will be required to expand its employee base and hire additional employees to support its operations as a public company which will increase its operating costs in future periods.

If REE is unable for any reason to meet the continued listing requirements of Nasdaq, such action or inaction could result in a delisting of the REE Class A Ordinary Shares.

If, after listing, REE 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 the REE Class A Ordinary Shares. Such a delisting would likely have a negative effect on the price of the REE Class A Ordinary Shares and would impair your ability to sell or purchase the REE Class A Ordinary Shares when you wish to do so. In the event of a delisting, REE can provide no assurance that any action taken by it to restore compliance with listing requirements would allow its the REE Class A Ordinary Shares to become listed again, stabilize the market price or improve the liquidity of its the REE Class A Ordinary Shares, prevent its the REE Class A Ordinary Shares from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.

If securities and industry analysts do not publish research or reports about REE’s business or publish negative reports about its business, REE’s share price and trading volume may suffer.

The trading market for the REE Class A Ordinary Shares will depend on the research and reports that securities or industry analysts publish about REE or its business. Currently, REE does not have any analyst coverage and may not obtain analyst coverage in the future. In the event REE obtains analyst coverage, it will not have any control over such analysts. If one or more of the analysts who cover REE downgrade REE’s shares or change their opinion of REE’s shares, REE’s share price would likely decline. If one or more of these analysts cease coverage of REE or fail to regularly publish reports on REE, REE could lose visibility in the financial markets, which could cause its share price or trading volume to decline.

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As REE grows rapidly and expands into multiple global markets, there is a risk that it will fail to maintain an effective system of internal controls and its ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected. REE may identify material weaknesses in its internal controls over financing reporting which it may not be able to remedy in a timely manner.

As a public company, REE will operate in an increasingly demanding regulatory environment, which requires it to comply with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the regulations of Nasdaq, the rules and regulations of the SEC, expanded disclosure requirements, accelerated reporting requirements and more complex accounting rules. Company responsibilities required by the Sarbanes-Oxley Act include establishing corporate oversight and adequate internal control over financial reporting and disclosure controls and procedures. Effective internal controls are necessary for REE to produce reliable financial reports and are important to help prevent financial fraud. Commencing with its fiscal year ending the year in which the business combination is completed, REE must perform system and process evaluation and testing of its internal controls over financial reporting to allow management to report on the effectiveness of its internal controls over financial reporting in its Form 20-F filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. Prior to the Closing, REE has never been required to test its internal controls within a specified period and, as a result, it may experience difficulty in meeting these reporting requirements in a timely manner.

REE anticipates that the process of building its accounting and financial functions and infrastructure will require significant additional professional fees, internal costs and management efforts. REE expects that it will need to implement a new internal system to combine and streamline the management of its financial, accounting, human resources and other functions. However, such a system would likely require REE to complete many processes and procedures for the effective use of the system or to run its business using the system, which may result in substantial costs. Any disruptions or difficulties in implementing or using such a system could adversely affect REE’s controls and harm its business. Moreover, such disruption or difficulties could result in unanticipated costs and diversion of management’s attention. In addition, REE may discover additional weaknesses in its system of internal financial and accounting controls and procedures that could result in a material misstatement of its financial statements. REE’s internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

If REE is not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if it is unable to maintain proper and effective internal controls, REE may not be able to produce timely and accurate financial statements. If REE cannot provide reliable financial reports or prevent fraud, its business and results of operations could be harmed, investors could lose confidence in its reported financial information and REE could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.

REE will incur increased costs as a result of its operation as a public company, and its management will be required to devote substantial time and resources to employing new compliance initiatives in order to comport with the regulatory requirements applicable to public companies.

If REE completes the Merger and becomes a public company, 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 REE is no longer an emerging growth company, as defined in Section 2(a) of the Securities Act. As a public company, REE 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. REE’s management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, REE 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 REE’s net loss. For example, REE 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. REE 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 REE to attract and retain qualified persons to serve on its board of directors, its board committees or as executive officers.

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REE 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 Merger, REE will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because REE 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 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 certain of these matters and intends to furnish comparable quarterly information 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.

As REE 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, REE is permitted to follow certain home country corporate governance practices rather than those otherwise required by Nasdaq rules, provided that it discloses the requirements it is not following and describes the equivalent home country practices it follows instead. REE intends to rely on this “foreign private issuer exemption” with respect to the Nasdaq rules for director nomination procedures and shareholder meeting quorums. REE may in the future elect to follow home country practices with regard to other matters. As a result, its shareholders will not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.

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

As discussed above, REE 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 REE on June 30, 2021. In the future, REE 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 REE 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. REE 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, REE would incur significant additional legal, accounting and other expenses that it will not incur as a foreign private issuer.

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Risks Related to Regulation

REE’s financial and operational projections rely in part on existing and future regulations and incentive programs supporting EV adoption.

There has been a significant growth in the adoption of environmentally driven regulations and incentive programs with low and zero emission targets with the automotive industry being among the most impacted industries. Such measures encourage local and national governments to implement various forms of rebates and credits for the purchase of an EV. In addition, regulations in many cities, states and countries are also encouraging a shift away from — or in some cases banning entirely — fossil fuel-powered vehicles, with many of the earliest of these regulations targeted at buses, trucks and delivery vehicles. REE’s financial and operational projections include the continued growth in existing and similar regulations and incentive programs to accelerate the adoption of EV technology into the wider market. There is no guarantee that such regulations and incentive programs will be successful in encouraging adoption of EV technology and there is no guarantee that new regulations and incentive programs will be adopted or that existing regulations and incentive programs will remain in place. For example, the development of an alternative fuel besides electricity that results in low or no emissions may shift the focus of such regulations and incentive programs away from EV technology. The failure for new regulations and incentive programs to be adopted as expected or the termination of existing regulations and incentive programs could materially and adversely affect the growth of the EV market generally and REE’s business, prospects, financial condition and operating results.

REE may encounter obstacles outside of its control that slow the adoption of EVs in the market, including but not limited to regulatory requirements or infrastructure limitations.

While REE’s products are subject to substantial regulation under federal, state and local laws, REE believes that its products will be in compliance with all applicable laws when they are offered to potential customers. However, to the extent the laws change, new laws are introduced, or if REE introduces new products in the future, some or all of its products may not comply with applicable international federal, state or local laws. Further, certain federal, state and local laws and industry standards currently regulate electrical and electronics equipment. Although standards for EVs are not yet generally available or accepted as industry standards, REE’s products may become subject to international, federal, state, and local regulation in the future. Compliance with these regulations could be burdensome, time consuming, and expensive.

REE’s products are subject to environmental and safety compliance with various federal and state regulations, including regulations promulgated by the Environmental Protection Agency, the National Highway Traffic and Safety Administration and various state boards, and compliance certification is required for each new model year. The cost of these compliance activities and the delays and risks associated with obtaining approval can be substantial. The risks, delays and expenses incurred in connection with such compliance could be substantial.

In addition, REE’s products involve a novel design and new technology, including locating critical vehicle components (steering, braking, suspension, powertrain and control) into the area between the chassis and the wheel and X-by-Wire Control technology, which may not meet existing safety standards or require modification in order to comply with various regulatory requirements. In particular, while there is limited related regulation in the EU, REE’s X-by-Wire technology has not received significant regulatory attention globally (including in the U.S.). There is no guarantee that REE’s X-by-Wire technology will receive regulatory approval generally, and there is no guarantee that REE’s X-by-Wire Control technology will comply with any relevant regulation that is put in place in the future. Compliance with regulatory requirements is expensive, at times requiring the replacement, enhancement or modification of equipment, facilities or operations. There can be no assurance that REE will be able to maintain its profitability by offsetting any increased costs of complying with future regulatory requirements.

REE is subject to various environmental laws and regulations that could impose substantial costs on its business and cause delays in building its manufacturing facilities.

REE’s operations are and will be subject to international, federal, state and local environmental laws and regulations, including laws relating to the use, handling, storage, disposal of and human exposure to hazardous materials. Environmental and health and safety laws and regulations can be complex, and REE has limited experience complying with them. Moreover, REE expects that it will be affected by future amendments to such laws or other new environmental and health and safety laws and regulations which may require REE to change its operations, potentially resulting in a

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material adverse effect on its business, prospects, financial condition and operating results. These laws can give rise to liability for administrative oversight costs, cleanup costs, property damage, bodily injury, fines and penalties. Capital and operating expenses needed to comply with environmental laws and regulations can be significant, and violations may result in substantial fines and penalties, third-party damages, suspension of production or a cessation of REE’s operations.

Contamination at properties REE will own or operate, REE formerly owned or operated or to which hazardous substances were sent by REE, may result in liability for REE under environmental laws and regulations, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, which can impose liability for the full amount of remediation-related costs without regard to fault, for the investigation and cleanup of contaminated soil and ground water, for building contamination and impacts to human health and for damages to natural resources. The costs of complying with environmental laws and regulations and any claims concerning noncompliance, or liability with respect to contamination in the future, could have a material adverse effect on REE’s financial condition or operating results.

REE and its potential suppliers and strategic partners are or may be subject to substantial regulation and unfavorable changes to, or failure by REE or its potential suppliers and strategic partners to comply with any such regulations could substantially harm REE’s business and operating results.

REE’s products, and the sale of motor vehicles including EVs in general, are subject to substantial regulation under international, federal, state, and local laws. REE expects to incur significant costs in complying with these regulations. Regulations related to the EV industry and alternative energy are currently evolving and REE faces risks associated with changes to these regulations.

To the extent the laws change, REE’s products may not comply with applicable international, federal, state or local laws, which would have an adverse effect on its business. Compliance with changing regulations could be burdensome, time consuming, and expensive. To the extent compliance with new regulations is cost prohibitive, REE’s business, prospects, financial condition and operating results would be adversely affected.

Internationally, there may be laws in jurisdictions REE has not yet entered or laws it is unaware of in jurisdictions it has entered that may restrict its sales or other business practices. Even for those jurisdictions REE has analyzed, the laws in this area can be complex, difficult to interpret and may change over time. Continued regulatory limitations and other obstacles interfering with REE’s ability to sell products could have a negative and material impact on its business, prospects, financial condition and results of operations.

The evolution of the regulatory framework for autonomous vehicles and their related components is outside of REE’s control and it cannot guarantee that its products will achieve the requisite level of autonomy to enable driverless systems within the current projected framework, if at all.

There are currently no federal U.S. regulations pertaining to the safety of self-driving vehicles; however, the National Highway Traffic and Safety Administration has established recommended guidelines. Certain states have legal restrictions on self-driving vehicles, and many other states are considering them. This patchwork increases the difficulty in legal compliance for EVs and their related technology, parts and components. In Europe, certain vehicle safety regulations apply to self-driving braking and steering systems, and certain treaties also restrict the legality of certain higher levels of self-driving vehicles. Self-driving laws and regulations are expected to continue to evolve in numerous jurisdictions in the U.S. and foreign countries and may restrict autonomous driving features that REE may deploy.

REE is subject to governmental export and import control laws and regulations. Any failure on behalf of REE to comply with these laws and regulations could have an adverse effect on its business, prospects, financial condition and operating results.

In recent years, both China and the United States have each imposed tariffs indicating the potential for further trade barriers. These tariffs may escalate a nascent trade war between China and the United States. Tariffs could potentially impact its raw material prices and impact any plans to sell REE’s products or EVs that would use REE’s products in China. In addition, these developments could have a material adverse effect on global economic conditions and the stability of global financial markets. Any of these factors could have a material adverse effect on REE’s business, financial condition and results of operations.

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The UK’s withdrawal from the European Union (commonly referred to as Brexit), could result in increased regulatory, economic and political uncertainty, and impose additional challenges to REE in securing regulatory approval of its products or EVs using REE’s product in the European Union and the rest of Europe.

In June 2016, voters in the UK approved a referendum to withdraw the UK’s membership from the European Union (“EU”), which is commonly referred to as “Brexit.” The UK’s withdrawal from the EU occurred on January 31, 2020, but the UK remained in the EU’s customs union and single market for a transition period that expired on December 31, 2020. On December 24, 2020, the UK and the EU entered into a trade and cooperation agreement (the “Trade and Cooperation Agreement”), which was applied on a provisional basis from January 1, 2021. While the economic integration does not reach the level that existed during the time the UK was a member state of the EU, the Trade and Cooperation Agreement sets out preferential arrangements in areas such as trade in goods and in services, digital trade and intellectual property. Negotiations between the UK and the EU are expected to continue in relation to the relationship between the UK and the EU in certain other areas which are not covered by the Trade and Cooperation Agreement. The long term effects of Brexit will depend on the effects of the implementation and application of the Trade and Cooperation Agreement and any other relevant agreements between the UK and the EU. REE has facilities and employees in both the UK and other European countries, including the Engineering Center. REE cannot predict whether or not the UK will significantly alter its current laws and regulations in respect of the EV industry and, if so, what impact any such alteration would have on REE or its business. Moreover, REE cannot predict the impact that Brexit will have on (i) the marketing of its products or (ii) the process to obtain regulatory approval in the UK for its products. As a result of Brexit, REE may experience adverse impacts on customer demand and profitability in the UK and other markets. Depending on the terms of Brexit and any subsequent trade agreement, the UK could also lose access to the single EU market, or specific countries in the EU, resulting in a negative impact on the general and economic conditions in the UK and the EU. Changes may occur in regulations that REE is required to comply with as well as amendments to treaties governing tax, duties, tariffs, etc. which could adversely impact its operations and require it to modify its financial and supply arrangements. For example, the imposition of any import restrictions and duties levied on REE’s products may make its products more expensive and less competitive from a pricing perspective. To avoid such impacts, REE may have to restructure or relocate some of its operations which would be costly and negatively impact its profitability and cash flow.

Additionally, political instability in the European Union as a result of Brexit may result in a material negative effect on credit markets, currency exchange rates and foreign direct investments and any subsequent trade agreement in the EU and UK. This deterioration in economic conditions could result in increased unemployment rates, increased short- and long-term interest rates, adverse movements in exchange rates, consumer and commercial bankruptcy filings, a decline in the strength of national and local economies, and other results that negatively impact household incomes.

Furthermore, as a result of Brexit, other European countries may seek to conduct referenda with respect to their continuing membership with the European Union. Given these possibilities and others REE may not anticipate, as well as the absence of comparable precedent, it is unclear what financial, regulatory and legal implications the withdrawal of the UK from the European Union would have and how such withdrawal would affect REE, and the full extent to which its business could be adversely affected.

REE may become involved in legal and regulatory proceedings and commercial or contractual disputes, which could have an adverse effect on its profitability and consolidated financial position.

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

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REE is subject to U.S. and foreign anti-corruption and anti-money laundering laws and regulations. As a result, REE may face criminal liability and other serious consequences for violations of such laws, which could harm its business.

REE is or will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which it conducts or in the future may conduct activities, including the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act 2010, and other anti-corruption laws and regulations. The FCPA and the U.K. Bribery Act 2010 prohibit REE and its officers, directors, employees and business partners acting on its behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. The U.K. Bribery Act also prohibits non-governmental “commercial” bribery and soliciting or accepting bribes. A violation of these laws or regulations could adversely affect REE’s business, results of operations, financial condition and reputation. REE’s policies and procedures designed to ensure compliance with these regulations may not be sufficient and its directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which it may be held responsible.

Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject REE to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect REE’s business, results of operations, financial condition and reputation. In addition, changes in economic sanctions laws in the future could adversely impact REE’s business and investments in its shares.

The intended tax effects of REE’s corporate structure and intercompany arrangements depend on the application of the tax laws of various jurisdictions and on how REE operates its business.

REE is incorporated in and a tax resident in Israel. REE currently has subsidiaries in the UK, Germany, and the U.S. If REE succeeds in growing its business, REE expects to conduct increased operations through its subsidiaries in various countries and tax jurisdictions, in part through intercompany service agreements between REE and its subsidiaries. In that case, REE’s corporate structure and intercompany transactions, including the manner in which REE develops and uses its intellectual property, will be organized so that REE can achieve its business objectives in a tax-efficient manner and in compliance with applicable transfer pricing rules and regulations. If two or more affiliated companies are located in different countries or tax jurisdictions, the tax laws and regulations of each country generally will require that transfer prices be the same as those between unrelated companies dealing at arm’s length and that appropriate documentation be maintained to support the transfer prices. While REE believes that it operates in compliance with applicable transfer pricing laws and intends to continue to do so, its transfer pricing procedures are not binding on applicable taxing authorities.

Significant judgment is required in evaluating REE’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. For example, REE’s effective tax rates could be adversely affected by changes in foreign currency exchange rates or by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations. In addition, its effective tax rate and the availability of any tax holidays could be adversely affected if REE does not obtain favorable tax rulings from certain taxing authorities. As REE intends to operate in various countries and taxing jurisdictions, the application of tax laws can be subject to diverging and sometimes conflicting interpretations by taxing authorities of these jurisdictions. It is not uncommon for taxing authorities in different countries to have conflicting views, for instance, with respect to, among other things, the manner in which the arm’s length standard is applied for transfer pricing purposes, or with respect to the valuation of intellectual property.

In addition, tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. REE continues to assess the impact of such changes in tax laws and interpretations on its business and may determine that changes to its structure, practice, tax positions or the manner in which it conducts its business are necessary in light of such changes and developments in the tax laws of the jurisdictions in which REE operates. Such changes may nevertheless be ineffective in avoiding an increase in its consolidated tax liability, which could adversely affect its financial condition, results of operations and cash flows.

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If taxing authorities in any of these countries were to successfully challenge REE’s transfer prices as not reflecting arm’s length transactions, they could require REE to adjust its transfer prices and thereby reallocate its income to reflect these revised transfer prices, which could result in a higher tax liability to REE. In addition, if the country from which the income is reallocated does not agree with the reallocation, both countries could tax the same income, potentially resulting in double taxation. If taxing authorities were to allocate income to a higher tax jurisdiction, subject REE’s income to double taxation or assess interest and penalties, it would increase REE’s consolidated tax liability, which could adversely affect its financial condition, results of operations and cash flows.

Risks Related to REE’s Information Security

In order to enter into production of its products, REE must develop complex software and technology systems in coordination with its potential suppliers and strategic partners. REE can provide no guarantee that such systems will be successfully developed.

REE’s products will use a substantial amount of third-party and in-house software codes and complex hardware to operate. The development of such advanced technologies are inherently complex, and REE will need to coordinate with its potential suppliers and strategic partners in order to reach production for its products. Defects and errors may be revealed over time and REE’s control over the performance of third-party services and systems may be limited. Thus, REE’s potential inability to develop the necessary software and technology systems may harm its competitive position.

REE is relying on potential suppliers and strategic partners to develop a number of emerging technologies for use in its products, including lithium ion battery technology. These technologies are not today, and may not ever be, commercially viable. There can be no assurances that REE’s potential suppliers and strategic partners will be able to meet the technological requirements, production timing, and volume requirements to support its business plan. In addition, the technology may not comply with the cost, performance useful life and warranty characteristics REE anticipates in its business plan. As a result, REE’s business plan could be significantly impacted and REE may incur significant liabilities under warranty claims which could adversely affect its business, prospects, and results of operations.

REE is subject to stringent and changing privacy laws, regulations and standards, information security policies and contractual obligations related to data privacy and security. REE’s actual or perceived failure to comply with such obligations could harm its business. Such legal requirements are evolving, uncertain and may require improvements in, or changes to, REE’s policies and operations.

REE expects to face significant challenges with respect to information security and privacy, including the storage, transmission and sharing of confidential information. REE will transmit and store confidential and private information of its customers, such as personal information, including names, accounts, user IDs and passwords, and payment or transaction related information.

REE has adopted strict information security policies and deployed advanced measures to implement the policies, including, among others, advanced encryption technologies, and plans to continue to deploy additional measurers as REE grows. However, advances in technology, an increased level of sophistication and diversity of REE’s products and services, an increased level of expertise of hackers, new discoveries in the field of cryptography or others can still result in a compromise or breach of the measures that it uses. If REE is unable to protect its systems, and hence the information stored in its systems, from unauthorized access, use, disclosure, disruption, modification or destruction, such problems or security breaches could cause a loss, give rise to REE’s liabilities to the owners of confidential information or even subject it to fines and penalties. In addition, complying with various laws and regulations could cause REE to incur substantial costs or require it to change its business practices, including its data practices, in a manner adverse to REE’s business.

In addition, REE will need to comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the U.S., Europe and elsewhere. For example, the European Union adopted the General Data Protection Regulation (“GDPR”), which became effective on May 25, 2018 and the State of California adopted the California Consumer Privacy Act of 2018 (“CCPA”), which became effective in January 2020. Both the GDPR and the CCPA impose additional obligations on companies regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored. Compliance with existing, proposed and recently enacted laws (including implementation of the privacy and process enhancements called for under the GDPR) and regulations can be costly; any failure to comply with these regulatory standards could subject REE to legal and reputational risks.

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Compliance with any additional laws and regulations could be expensive, and may place restrictions on the conduct of REE’s business and the manner in which it interacts with its customers. Any failure to comply with applicable regulations could also result in regulatory enforcement actions against REE, and misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against REE by governmental entities or others, and damage to its reputation and credibility, and could have a negative impact on revenues and profits.

Significant capital and other resources may be required to protect against information security breaches or to alleviate problems caused by such breaches or to comply with REE’s privacy policies or privacy-related legal obligations. The resources required may increase over time as the methods used by hackers and others engaged in online criminal activities are increasingly sophisticated and constantly evolving. Any failure or perceived failure by REE to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could cause REE’s potential customer base to lose trust in REE and could expose REE to legal claims. Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of online retail and other online services generally, which may reduce the number of orders REE receives.

The global data protection landscape is rapidly evolving, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. REE may not be able to monitor and react to all developments in a timely manner. For example, California recently adopted the CCPA, which became effective in January 2020. The CCPA establishes a privacy framework for covered businesses, including an expansive definition of personal information and data privacy rights for California residents. The CCPA includes a framework with potentially severe statutory damages and private rights of action. The CCPA requires covered businesses to provide new disclosures to California residents, provide them new ways to opt-out of certain disclosures of personal information, and allow for a new cause of action for data breaches. As REE expands its operations, the CCPA may increase REE’s compliance costs and potential liability. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States. Other states have begun to propose similar laws. Compliance with any applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and REE may be required to put in place additional mechanisms to comply with such laws and regulations.

REE publishes privacy policies and other documentation regarding its collection, processing, use and disclosure of personal information and/or other confidential information. Although REE endeavors to comply with its published policies and other documentation, REE may at times fail to do so or may be perceived to have failed to do so. Moreover, despite its efforts, REE may not be successful in achieving compliance if REE’s employees, contractors, service providers or vendors fail to comply with its published policies and documentation. Such failures can subject REE to potential local, state and federal action if they are found to be deceptive, unfair, or misrepresentative of its actual practices. Claims that REE has violated individuals’ privacy rights or failed to comply with data protection laws or applicable privacy notices even if REE is not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm its business.

REE is subject to cybersecurity risks to its various systems and software and any material failure, weakness, interruption, cyber event, incident or breach of security could prevent REE from effectively operating its business, or may cause harm to its business that may or may not be reparable.

REE is at risk for interruptions, outages and breaches of its: (a) operational systems, including business, financial, accounting, product development, data processing or production processes, owned by REE or its potential suppliers and strategic partners; (b) facility security systems, owned by REE or its potential suppliers and strategic partners; (c) transmission control modules or other in-product technology, owned by REE or its potential suppliers and strategic partners; (d) the integrated software in REE’s products; or (e) customer data that REE processes or its potential suppliers and strategic partners process on its behalf. Such incidents could: materially disrupt REE’s operational systems; result in loss of intellectual property, trade secrets or other proprietary or competitively sensitive information; compromise certain information of employees, potential customers, potential suppliers and strategic partners, or others; jeopardize the security of REE’s facilities; or affect the performance of in-product technology and the integrated software in REE’s products.

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REE plans to include in-vehicle services and functionality that utilize data connectivity to monitor performance and timely capture opportunities to enhance on-the-road performance and for safety and cost-saving preventative maintenance. The availability and effectiveness of REE’s services depend on the continued operation of information technology and communications systems. REE’s systems will be vulnerable to damage or interruption from, among others, physical theft, fire, terrorist attacks, natural disasters, power loss, war, telecommunications failures, viruses, denial or degradation of service attacks, ransomware, social engineering schemes, insider theft or misuse or other attempts to harm REE’s systems. REE intends to use its in-vehicle services and functionality to log information about each vehicle’s use in order to aid REE in vehicle diagnostics and servicing. REE’s potential customer base may object to the use of this data, which may increase REE’s vehicle maintenance costs and harm its business prospects.

Moreover, there are inherent risks associated with developing, improving, expanding and updating REE’s current systems, such as the disruption of REE’s data management, procurement, production execution, finance, supply chain and sales and service processes. These risks may affect REE’s ability to manage its data and inventory, procure parts or supplies or assemble, deploy, deliver and service its products, adequately protect its intellectual property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts. REE cannot be sure that these systems upon which it relies, including those of its potential suppliers and strategic partners, will be effectively implemented, maintained or expanded as planned. If REE does not successfully implement, maintain or expand these systems as planned, its operations may be disrupted, its ability to accurately and timely report its financial results could be impaired, and deficiencies may arise in its internal control over financial reporting, which may impact REE’s ability to certify its financial results. Moreover, REE’s proprietary information or intellectual property could be compromised or misappropriated and its reputation may be adversely affected. If these systems do not operate as REE expects them to, REE may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

Any unauthorized control or manipulation of the information technology systems in REE’s products could result in loss of confidence in REE and its products and harm REE’s business.

REE’s products will contain complex information technology systems. For example, REE’s products will be outfitted with built-in data connectivity to accept and install periodic remote updates from REE to improve or update the functionality of its products. REE has designed, implemented and tested security measures intended to prevent cybersecurity breaches or unauthorized access to its information technology networks, its products and their systems, and intends to implement additional security measures as necessary. However, hackers may attempt in the future, to gain unauthorized access to modify, alter and use such networks, products and systems to gain control of, or to change, REE’s products’ functionality, user interface and performance characteristics, or to gain access to data stored in or generated by the products. Vulnerabilities could be identified in the future and REE’s remediation efforts may not be successful. Any unauthorized access to or control of REE’s products or their systems or any loss of data could result in legal claims or proceedings. In addition, regardless of their veracity, reports of unauthorized access to REE’s products, their systems or data, as well as other factors that may result in the perception that REE’s products, their systems or data are capable of being “hacked,” could negatively affect REE’s brand and harm its business, prospects, financial condition and operating results.

REE intends to retain certain personal information about its products, customers, employees and others that, if compromised, could have a material, adverse impact on REE’s financial performance and results of operations or prospects.

REE plans to collect, store, transmit and otherwise process data from products, customers, employees and others as part of its business and operations, which may include personal data or confidential or proprietary information. REE also works with potential suppliers and strategic partners that collect, store and process such data on its behalf and in connection with its products. There can be no assurance that any security measures that REE or its potential suppliers and strategic partners have implemented will be effective against current or future security threats. If a compromise of data were to occur, REE may become liable under its contracts with other parties and under applicable law for damages and incur penalties and other costs to respond to, investigate and remedy such an incident. REE’s systems, networks and physical facilities could be breached or personal information could otherwise be compromised due to employee error or malfeasance, if, for example, third parties attempt to fraudulently induce REE’s employees or REE’s customers to disclose information or user names and/or passwords. Third parties may also exploit vulnerabilities in, or obtain unauthorized access to, products, systems, networks and/or physical facilities utilized by REE’s service providers and vendors.

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Risks Related to REE’s Intellectual Property

REE may incur significant costs and expenses in connection with the protection and enforcement of its intellectual property rights, including but not limited to litigation costs.

REE may not be able to prevent others from unauthorized use of its intellectual property, which could harm its business and competitive position. REE relies on a combination of patents, trade secrets (including know-how), employee and third-party nondisclosure agreements, copyrights, trademarks, intellectual property licenses, and other contractual rights to establish and protect its rights in its technology. Despite REE’s efforts to protect its proprietary rights, third parties may attempt to copy or otherwise obtain and use REE’s intellectual property or seek court declarations that they do not infringe upon its intellectual property rights. Monitoring unauthorized use of REE’s intellectual property is difficult and costly, and the steps REE has taken or will take will prevent misappropriation. From time to time, REE may have to resort to litigation to enforce its intellectual property rights, which could result in substantial costs and diversion of its resources.

The protection of REE’s intellectual property rights will be important to its future business opportunities. However, the measures REE takes to protect its intellectual property from unauthorized use by others may not be effective for various reasons, including the following:

•        as noted below, any patent applications REE submits may not result in the issuance of patents (and patents have not yet issued to REE based on its pending applications);

•        the scope of REE’s patents that may subsequently issue may not be broad enough to protect its proprietary rights;

•        REE’s issued patents may be challenged or invalidated by third parties;

•        REE’s employees or business partners may breach their confidentiality, non-disclosure and non-use obligations to REE;

•        third parties may independently develop technologies that are the same or similar to REE’s;

•        the costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may make enforcement impracticable; and

•        current and future competitors may circumvent or otherwise design around REE’s patents.

Patent, trademark, and trade secret laws vary significantly throughout the world. A number of foreign countries do not protect intellectual property rights to the same extent as do the laws of the U.S. Therefore, REE’s intellectual property rights may not be as strong or as easily enforced outside of the U.S. Failure to adequately protect REE’s intellectual property rights could result in its competitors offering similar products, potentially resulting in the loss of some of REE’s competitive advantage and a decrease in its revenue which, would adversely affect its business, prospects, financial condition and operating results.

Failure to adequately protect REE’s intellectual property rights could result in REE’s competitors offering similar products, potentially resulting in the loss of some of REE’s competitive advantage and a decrease in its revenue, which could adversely affect REE’s business, prospects, financial condition and operating results.

Also, while REE has registered and applied for trademarks in an effort to protect its investment in its brand and goodwill with customers, competitors may challenge the validity of those trademarks and other brand names in which REE has invested. Such challenges can be expensive and may adversely affect REE’s ability to maintain the goodwill gained in connection with a particular trademark.

REE may be sued for infringing or misappropriating intellectual property rights of third parties, and any such litigation would be both costly and time consuming and could prevent REE from developing or commercializing its future products.

Companies, organizations, or individuals, including REE’s competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with REE’s ability to make, use, develop, sell, lease or market its products which could make it more difficult for REE to operate its business. From time to time, REE may

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receive communications from holders of patents or trademarks regarding their proprietary rights. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or otherwise assert their rights and urge REE to take licenses. REE’s applications and uses of trademarks relating to its design, software or artificial intelligence technologies could be found to infringe upon existing trademark ownership and rights. In addition, if REE is determined to have infringed upon a third party’s intellectual property rights, it may be required to do one or more of the following:

•        cease selling or leasing, incorporating certain components into, or using products or offering goods or services that incorporate or use the challenged intellectual property;

•        pay substantial damages;

•        seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms, or at all;

•        redesign its products or other goods or services; or

•        establish and maintain alternative branding for its products and services.

In the event of a successful claim of infringement against REE and REE’s failure or inability to obtain a license to the infringed technology or other intellectual property right, REE’s business, prospects, operating results and financial condition could be materially and adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.

Patent applications submitted by REE to the relevant authorities may not result in granted patents or may require modification in order to obtain approval.

REE cannot be certain that it is the first inventor of the subject matter to which it has filed a particular patent application, or if it is the first party to file such a patent application. If another party has filed a patent application for the same subject matter as REE has, REE may not be entitled to the protection sought by the patent application. Further, the scope of protection of issued patent claims is often difficult to determine. As a result, REE cannot be certain that the patent applications that it files will issue, or that its issued patents will afford protection against competitors with similar technology. In addition, REE’s competitors may design around REE’s issued patents, which may adversely affect its business, prospects, financial condition or operating results.

REE cannot assure you that it will be granted patents pursuant to its pending applications. Even if REE’s patent applications succeed and it is issued patents in accordance with them, it is still uncertain whether these patents will be contested, circumvented or invalidated in the future. In addition, the rights granted under any issued patents may not provide REE with meaningful protection or competitive advantages. The claims under any patents that issue from REE’s patent applications may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to REE’s. The intellectual property rights of others could also bar REE from licensing and exploiting any patents that issue from its pending applications. Numerous patents and pending patent applications owned by others exist in the fields in which REE has developed and are developing its technology. These patents and patent applications might have priority over REE’s patent applications and could subject its patent applications to invalidation. Finally, in addition to those who may claim priority, any of REE’s existing or pending patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable.

REE may be subject to damages resulting from claims that either it or any of its employees wrongfully used or disclosed alleged trade secrets of their employees’ former employers or that they allegedly violated certain covenants, such as non-compete agreements, to which REE or its employees may have been previously or currently bound.

Many of REE’s employees were previously employed by other automotive companies or by suppliers to automotive companies. REE may be subject to claims that it or these employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If REE fails in defending such claims, in addition to paying monetary damages, it may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent REE’s ability to commercialize its products, which could severely harm its business. Even if REE is successful in defending against these claims, litigation could result in substantial costs and demand on management resources.

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In addition to patented technology, REE relies on its unpatented proprietary technology, trade secrets, processes and knowledge.

REE 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 REE believes is best protected by means that do not require public disclosure. REE 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, REE 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. REE has limited control over the protection of trade secrets used by its potential suppliers and strategic partners and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, REE’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 REE, 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 REE’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 REE operates may afford little or no protection to its trade secrets.

REE 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 REE’s proprietary information to its competitive disadvantage. REE 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.

The terms of grants received from the Israeli government require us to satisfy specified conditions in order to transfer outside of Israel the manufacture of products based on know-how funded by the Israel Innovation Authority or to transfer outside of Israel the know-how itself.

Under the Israeli Encouragement of Research, Development and Technological Innovation in Industry Law, 5744-1984, or the Innovation Law, research and development programs which meet specified criteria and are approved by a committee of the Israel Innovation Authority of the Israeli Ministry of Economy and Industry, or IIA (formerly known as Office of Chief Scientist), are eligible for grants from the IIA. The grant amounts are determined by the research committee, and are typically a percentage of the project’s expenditures. Under most programs, the grantee is required to pay royalties to the State of Israel from the sale of products developed under the program.

REE’s research and development efforts in relation to its Softwheel segment have been partially financed through royalty-bearing and non-royalty bearing grants from the IIA in the total amount of $1,214,748. As of April 22, 2021, REE’s remaining contingent obligation with respect to royalty-bearing participation received or accrued, net of royalties paid or accrued, totaled approximately $715,000.

Under the research and development agreements with the IIA and pursuant to applicable laws, REE is required to pay royalties at the rate of 3-5% sales of products that incorporate know-how developed with the IIA-funded, royalty-bearing grants. Such royalties are due up to an amount equal to 100% of the IIA grants received, linked to the U.S. dollar plus interest on the unpaid amount received based on the 12-month LIBOR rate (from the year the grant was approved) applicable to U.S. dollar deposits. If REE returns to production of these products outside of Israel and generates sales, the ceiling will increase based on the percentage of production that is outside of Israel, up to a maximum of 300% of the IIA grants, linked to the dollar and bearing interest as noted above.

•        Local Manufacturing Obligation.    The terms of the grants under the Innovation Law require that REE manufacture the products developed with these grants in Israel (but do not restrict the sale of products that incorporate the know-how). Under the regulations promulgated under the Innovation Law, the products may be manufactured outside Israel by REE or by another entity only if prior approval is received from the IIA (such approval is not required for the transfer of up to 10% of the manufacturing capacity in the aggregate, in which case a notice must be provided to the IIA and not objected to by the IIA within 30 days of such notice).

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•        Know-How transfer limitation

•        The Innovation Law restricts the ability to transfer know-how funded by the IIA outside of Israel. Transfer of IIA funded know-how outside of Israel requires prior approval of the IIA and may be subject to payments to the IIA, calculated according to formulae provided under the Innovation Law. If REE wishes to transfer IIA funded know-how, the terms for approval will be determined according to the nature of the transaction and the consideration paid to REE in connection with such transfer.

•        Approval of transfer of IIA funded know-how to another Israeli company may be granted only if the recipient abides by the provisions of the Innovation Law and related regulations, including the restrictions on the transfer of know-how and manufacturing rights outside of Israel.

•        Change of Control.    Any non-Israeli citizen, resident or entity that, among other things, (i) becomes a holder of 5% or more of REE’s share capital or voting rights, (ii) is entitled to appoint one or more of REE’s directors or our chief executive officer or (iii) serves as one of REE’s directors or as its chief executive officer (including holders of 25% or more of the voting power, equity or the right to nominate directors in such direct holder, if applicable) is required to notify the IIA and undertake to comply with the rules and regulations applicable to the grant programs of the IIA, including the restrictions on transfer described above.

Approval to manufacture products outside of Israel or consent to the transfer of IIA funded know-how, if requested, is within the discretion of the IIA. Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer IIA funded know-how or manufacturing out of Israel.

The consideration available to REE’s shareholders in a future transaction involving the transfer outside of Israel of know-how developed with IIA funding (such as a merger or similar transaction) may be reduced by any amounts that REE is required to pay to the IIA.

Risks Related to REE’s Dual Class Structure

The dual class structure of REE Ordinary Shares will have the effect of concentrating voting power with REE’s founders, who serve as its Chief Executive Officer and Chief Technology Officer, which will limit an investor’s ability to influence the outcome of important transactions, including a change in control.

REE Class B Ordinary Shares will have 10 votes per share, while shares of REE Class A Ordinary Shares will have one vote per share. Upon the consummation of the Merger, its Founders, Daniel Barel and Ahishay Sardes, will hold all REE Class B Ordinary Shares granting them each up to approximately 39% of voting power and together up to approximately 78% of the voting power of REE following the Merger (under the No Redemption Scenario). As a result, if they act together, they will be able to control matters submitted to REE’s shareholders for approval, including the election of directors, amendments of its organizational documents and any merger, consolidation, sale of all or substantially all of its assets or other major corporate transactions (although neither Founder will individually have a majority of the voting power). REE’s Founders may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentrated control may have the effect of delaying, preventing or deterring a change in control of REE, could deprive its shareholders of an opportunity to receive a premium for their shares as part of a sale of REE, and might ultimately affect the market price of shares of REE Class A Ordinary Shares. For information about its dual class structure, see the section titled “Description of REE Ordinary Shares.

REE cannot predict the impact REE’s dual class structure may have on the stock price of REE Class A Ordinary Shares.

REE cannot predict whether REE’s dual class structure will result in a lower or more volatile market price of REE Class A Ordinary Shares or in adverse publicity or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indexes. In July 2017, FTSE Russell and S&P Dow Jones announced that they would cease to allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. Beginning in 2017, MSCI, a leading stock index provider, opened public consultations on their treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices; however,

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in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. Under the announced policies, REE’s dual class capital structure would make us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices will not be investing in its shares. These policies are still fairly new and it is as of yet unclear what effect, if any, they will have on the valuations of publicly traded companies excluded from the indices, but it is possible that they may depress these valuations compared to those of other similar companies that are included. Because of REE’s dual class structure, REE will likely be excluded from certain of these indexes and REE cannot assure you that other stock indexes will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indexes, exclusion from stock indexes would likely preclude investment by many of these funds and could make Class A Ordinary Shares less attractive to other investors. As a result, the market price of REE Class A Ordinary Shares could be adversely affected.

Risks Related to REE’s Incorporation and Location in Israel