Item 1.01 Entry into a Material Definitive Agreement.
As described in more detail below in this Item 1.01 and in Items 5.02 and 5.03,
on July 21, 2022, Snap Inc. (the "Company") entered into a series of
transactions that provide for (i) employment agreements (the "Employment
Agreements") with Evan Spiegel and Robert Murphy (each, a "Co-Founder"),
pursuant to which Mr. Spiegel will continue to serve as our Chief Executive
Officer ("CEO") and Mr. Murphy will continue to serve as our Chief Technology
Officer ("CTO") for an initial term ending on January 1, 2027, during which they
each have agreed to devote substantially all of their professional time to the
Company, subject to certain conditions, (ii) the future declaration and payment
of a special dividend of one share of Class A common stock on each outstanding
share of Snap's common stock (the "Special Dividend"), which Special Dividend
shall not be declared and paid until the later of June 30, 2023 and the first
business day following the date on which the 65-Day VWAP (as defined below)
equals or exceeds $40 per share, and (iii) additional agreements to be entered
into with Messrs. Spiegel and Murphy and certain of their respective affiliates
(the "Co-Founder Agreements") which provide for, among other things, (a) the
Co-Founders being required under certain circumstances to convert an equal
number of shares of Class B common stock or Class C common stock into Class A
common stock in connection with sales by such Co-Founder of shares of Class A
common stock received in the Special Dividend, (b) conversion of a Co-Founder's
remaining shares of Class C common stock into Class B common stock at such time
as such Class C common stock represents in the aggregate less than 60% of such
Co-Founder's Base Class C Common Stock (as such term is defined in our Amended
and Restated Certification of Incorporation) and (c) in the event of any sale or
liquidation of the Company following the Special Dividend, shares of Class A
common stock, Class B common stock, and Class C common stock are to be treated
identically, equally and ratably, on a per share basis, with respect to any
consideration received.
Special Dividend
On July 19, 2022, our board of directors, after receiving the recommendation of
a special committee of the board of directors (the "Special Committee"),
determined that it is advisable and in our best interests, and in the best
interests of our stockholders (other than Mr. Spiegel and Mr. Murphy and certain
of their respective affiliates that hold shares of our capital stock, as to whom
no determination was made), to declare and pay a Special Dividend of one share
of Class A common stock as a one-time stock dividend on each outstanding share
of Snap's common stock; provided, however, that the Special Dividend shall not
be declared until the later of (i) June 30, 2023 and (ii) the first business day
following the date on which the 65-Day VWAP (as defined below) equals or exceeds
$40 per share, or, if the board of directors so determines, a date that is
within five business days after the later of such two dates. "65-Day VWAP" means
the average of the volume weighted average price per share of Class A common
stock traded on the New York Stock Exchange, or any other national securities
exchange on which the shares of Class A common stock are then traded, for each
of the 65 trading days ending on, and including, the first trading day
immediately preceding the date of determination of the 65-Day VWAP. If the
65-Day VWAP does not exceed $40 per share by July 21, 2032, the Special Dividend
will not be declared and paid and the Co-Founder Agreements shall terminate and
be of no further force and effect.
Co-Founder Agreements
In connection with the Special Dividend, our board of directors, after receiving
the recommendation of the Special Committee, has approved, and on July 21, 2022
we entered into, Co-Founder Agreements with each of Messrs. Spiegel and Murphy
and certain of their respective affiliates (generally, trusts and other estate
and philanthropic planning vehicles through which Messrs. Spiegel and Murphy
hold all or a portion of their shares of Class A common stock, Class B common
. . .
Item 2.02 Results of Operations and Financial Condition.
On July 21, 2022, Snap Inc. reported financial results for the three and six
months ended June 30, 2022. A copy of the press release and the investor letter
are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current
Report on Form 8-K and incorporated by reference.
The press release and investor letter are furnished and shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or subject to the liabilities of that section or Sections 11 and
12(a)(2) of the Securities Act of 1933, as amended. The information shall not be
deemed incorporated by reference into any other filing with the Securities and
Exchange Commission made by Snap Inc., whether made before or after today's
date, regardless of any general incorporation language in such filing.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Employment Agreements
In connection with the Special Dividend and the Co-Founders Agreements, our
board of directors, after receiving the recommendation of the Special Committee,
has approved, and on July 21, 2022 we entered into, Employment Agreements (the
"Employment Agreements") with each of Messrs. Spiegel and Murphy, pursuant to
which Mr. Spiegel will continue to serve as our CEO and Mr. Murphy will continue
to serve as our CTO. The Employment Agreements are effective as of January 1,
2022, and will have an initial term of five years (the "Commitment Period"),
subject to automatic renewals for successive five year periods unless earlier
terminated as provided therein (each subsequent period, a "Renewal Period").
During the Commitment Period or any Renewal Period, Mr. Spiegel and Mr. Murphy
have agreed to devote substantially all of their professional time to the
Company, which will comprise a majority of their time during normal working
hours, subject to exceptions specifically approved by the board of directors.
Notwithstanding this, Mr. Spiegel and Mr. Murphy are entitled to pursue their
personal and philanthropic interests, so long as their devotion to those
interests comprises less than a majority of their time during normal working
hours on a monthly basis and such interests are not competitive with the
Company.
Mr. Spiegel and Mr. Murphy will each have an annual salary of $1. In addition,
under the Employment Agreements, subject to certain exceptions, we intend to
refrain from making any compensatory grants of equity or equity-based awards, or
paying any non-perquisite compensation to Mr. Spiegel and Mr. Murphy. During the
Commitment Period, Mr. Spiegel and Mr. Murphy will continue to be entitled to
(i) perquisites, including those available to senior executive officers of the
Company, (ii) participate in the Company's welfare and retirement benefits, and
(iii) certain services related to aircraft and security as set forth in the
Company's existing policies subject to certain exceptions as described in the
Employment Agreements
The foregoing description of the Employment Agreements is qualified in its
entirety by reference to the full text of the agreements, which are attached as
Exhibits 10.3 and 10.4, respectively, and incorporated by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On July 21, 2022, in connection with the Special Dividend, holders of an
aggregate of 231,626,943 shares of our Class C common stock, representing an
aggregate of over 99% of the voting power of our outstanding capital stock,
acted by written consent to
2
--------------------------------------------------------------------------------
adopt and approve an amendment to our Amended and Restated Certificate of
Incorporation (the "Amendment"). The terms of the Amendment are incorporated
herein by reference. A copy of the Amendment is attached as Exhibit 3.1.
Item 5.07 Submission of Matters to a Vote of Security Holders.
On July 20, 2022, we held our 2022 annual meeting of stockholders. That same
day, the holders of an aggregate of 231,626,943 shares of our Class C common
stock, representing an aggregate of over 99% of the voting power of our
outstanding capital stock, acted by written consent to elect the following
individuals to our board of directors: Evan Spiegel, Robert Murphy, Michael
Lynton, Kelly Coffey, Joanna Coles, Liz Jenkins, Stanley Meresman, Scott D.
Miller, Poppy Thorpe, and Fidel Vargas. Each of these individuals will serve
until the next annual meeting of stockholders and until his or her successor is
elected, or, if sooner, until the director's death, resignation, or removal.
Additionally, pursuant to this action by written consent, the holders ratified
the selection by the audit committee of our board of directors of Ernst & Young
LLP as our independent registered accounting firm for the fiscal year ending
December 31, 2022.
The information set forth under Item 5.03 of this Form 8-K is incorporated by
reference into this Item 5.07.
Item 8.01 Other Events.
On July 21, 2022, Snap Inc. announced its Board of Directors has authorized a
stock repurchase program of up to $500 million of its Class A common stock.
Repurchases of Class A common stock may be made from time to time, either
through open market transactions (including pre-set trading plans) or through
other transactions in accordance with applicable securities laws. Repurchases
under the program have been authorized for the next 12 months but the program
may be modified, suspended, or terminated at any time. A copy of the press
release is furnished as Exhibit 99.1 to this report and incorporated by
reference.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, about us and our industry that involve substantial
risks and uncertainties. All statements other than statements of historical
facts contained in this press release, including statements regarding guidance,
our future results of operations or financial condition, our stock repurchase
program, future stock dividends, future employment of our executives, business
strategy and plans, user growth and engagement, product initiatives, objectives
of management for future operations, and advertiser and partner offerings, are
forward-looking statements. In some cases, you can identify forward-looking
statements because they contain words such as "anticipate," "believe,"
"contemplate," "continue," "could," "estimate," "expect," "going to," "intend,"
"may," "plan," "potential," "predict," "project," "should," "target," "will," or
"would" or the negative of these words or other similar terms or expressions. We
caution you that the foregoing may not include all of the forward-looking
statements made in this press release.
You should not rely on forward-looking statements as predictions of future
events. We have based the forward-looking statements contained in this Current
Report on Form 8-K primarily on our current expectations and projections about
future events and trends, including our financial outlook, geo-political
conflicts, and the COVID-19 pandemic, that we believe may continue to affect our
business, financial condition, results of operations, and prospects. These
forward-looking statements are subject to risks and uncertainties related to:
our financial performance; our ability to attain and sustain profitability; our
ability to generate and sustain positive cash flow; our ability to attract and
retain users, publishers, and advertisers; competition and new market entrants;
managing our international expansion and our growth and future expenses;
compliance with new laws, regulations, and executive actions; our ability to
maintain, protect, and enhance our intellectual property; our ability to succeed
in existing and new market segments; our ability to attract and retain qualified
and key personnel; our ability to repay outstanding debt; future acquisitions,
divestitures or investments; and the potential adverse impact of climate change,
natural disasters, health epidemics, macroeconomic conditions, and war or other
armed conflict, as well as risks, uncertainties, and other factors described in
"Risk Factors" and elsewhere in our most recent periodic report filed with the
U.S. Securities and Exchange Commission, or SEC, which is available on the SEC's
website at www.sec.gov. Additional information will be made available in Snap
Inc.'s periodic report that will be filed with the SEC for the period covered by
this Current Report on Form 8-K and other filings that we make from time to time
with the SEC. In addition, any forward-looking statements contained in this
Current Report on Form 8-K are based on assumptions that we believe to be
reasonable as of this date. We undertake no obligation to update any
forward-looking statements to reflect events or circumstances after the date of
this Current Report on Form 8-K or to reflect new information or the occurrence
of unanticipated events, including future developments related to geo-political
conflicts, the COVID-19 pandemic, and macroeconomic conditions, except as
required by law.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
Amendment No. 1 to the Amended and Restated Certificate of
3.1 Incorporation of Snap Inc., filed July 21, 2022.
3
--------------------------------------------------------------------------------
Co-Founder Agreement among Snap Inc., Evan Spiegel, and the other
10.1 Holders signatory thereto, made as of July 21, 2022.
Co-Founder Agreement among Snap Inc., Robert Murphy, and the other
10.2 Holders signatory thereto, made as of July 21, 2022.
Employment Agreement by and between Snap Inc. and Evan Spiegel, dated
10.3 July 21, 2022.
Employment Agreement by and between Snap Inc. and Robert Murphy, dated
10.4 July 21, 2022.
99.1 Press release dated July 21, 2022.
99.2 Investor Letter dated July 21, 2022.
Cover Page Interactive Data File (embedded within the Inline XBRL
104 document)
4
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses
SNAP INC. 
