Item 1.01 Entry into a Material Definitive Agreement.
Business Combination Agreement
Business Combination
and Consideration
On May 25, 2021, PTK Acquisition Corp., a Delaware corporation (PTK), entered into a business
combination agreement (as it may be amended, supplemented or otherwise modified from time to time, the Business Combination Agreement) with Valens Semiconductor Ltd., a limited liability company organized under the laws of the
State of Israel (Valens) and Valens Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Valens (Merger Sub). Pursuant to the Business Combination Agreement, Merger Sub will merge with and
into PTK (the Business Combination), with PTK surviving the Business Combination as a wholly-owned subsidiary of Valens.
At the effective time of the Business Combination (the Effective Time), (i) each share of common stock of PTK, par value
$0.0001 per share (other than treasury stock), will be exchanged for one ordinary share of Valens, and (ii) each outstanding warrant of PTK will be assumed by Valens and will become a warrant exercisable for
one-half (1/2) of one ordinary share of Valens (subject to certain adjustments in accordance with the terms of the Business Combination Agreement). Upon consummation of the Business Combination, assuming none
of PTKs public stockholders demand redemption pursuant to PTKs amended and restated certificate of incorporation, the securityholders of Valens and certain members of Valens management will own approximately 78% of the outstanding
ordinary shares of Valens and the securityholders of PTK and the investors purchasing PIPE shares (as described below) will own approximately 22% of the outstanding ordinary shares of Valens.
Prior to the Effective Time, each preferred share of Valens will be converted into one ordinary share of Valens. Immediately following such
preferred share conversation but prior to the Effective Time, Valens intends to effect a reverse stock split of each Valens ordinary share into a number of Valens ordinary shares such that each such ordinary share has an implied value of $10.00 per
share as of an agreed measurement date shortly prior to Closing and based on an agreed equity valuation methodology. In addition, substantially contemporaneously with the Effective Time, Valens will also issue securities pursuant to the Subscription
Agreements, as described in more detail below.
Valens ordinary shares and warrants to be received by PTK Holdings LLC (the
Sponsor) and Valens ordinary shares held by Valenss current equityholders will be subject to the transfer restrictions described below under the heading Registration Rights Agreement.
The Business Combination and related transactions contemplated by the Business Combination Agreement (collectively, the
Transactions) are expected to be consummated in the fall of 2021, subject to the respective prior approvals of the stockholders of PTK and the ordinary and preferred shareholders of Valens, and the fulfillment of certain other
conditions as described in the Business Combination Agreement.
After the consummation of the Transactions, the current officers of Valens
will remain officers of the surviving entity. The size of the board of directors of Valens will initially have a minimum of three and maximum of nine members, with one member of being designated by the Sponsor.
Representations and Warranties
The
Business Combination Agreement contains representations and warranties of the parties, as applicable, relating to, among other things, organization and qualification; capitalization; the authorization, performance and enforceability of the Business
Combination Agreement; financial statements; absence of undisclosed liabilities; governmental actions and filings; permits; material contracts; absence of changes; litigation; compliance with applicable laws; status under the Investment Company Act
of 1940; employee plans; environmental matters; intellectual property; privacy and data security; labor matters; insurance; tax matters; brokers fees; real and personal property; transactions with affiliates; compliance with international
trade and anti-corruption laws; governmental grants; and antitrust matters.
The representations and warranties of the parties contained
in the Business Combination Agreement will terminate and be of no further force and effect as of the closing of the Transactions.
Covenants
The Business Combination Agreement includes customary covenants of the parties with respect to business operations prior to consummation of the
Transactions and efforts to satisfy conditions to the consummation of the Transactions. The Business Combination Agreement also contains additional covenants of the parties, including, among others, covenants providing for PTK and Valens to
cooperate in the preparation of a joint proxy statement/registration statement on Form F-4 (the Registration Statement) required to be prepared and filed with the Securities and Exchange
Commission (SEC) in connection with the Business Combination and for Valens to terminate certain existing investor rights agreements with its securityholders.