Snapchat secretly buys Vergence, who make smart glasses
Snapchat has bought Vergence, a company that makes smart glasses in the form of frames that can subtly record video footage. The Snapchat purchase came to light as a consequence of the massive Sony hack which has unveiled this information from the inbox of Sony Entertainment CEO Michael Lynton. Snapchat reportedly spent $15 million in cash and stock for the purchase of Vergence, although we don’t know why the company would be interested in owning a company that manufactures smart glasses.
According to the leaked information, Snapchat paid $11 million in cash and another $4 million in stocks to Vergence, who is now owned by Snapchat. Even though the purchase records seem valid, Vergence has no information published about it being the property of Snapchat, which is odd to say the least. The acquisition happened earlier this year, so we’re wondering why this has been kept a secret for so long. In any case, the whole matter is strange because we don’t know why Snapchat would buy a company that makes video recording glasses. Some speculate that the buyout might be a consequence of Vergence being low on cash, since another leaked email mentions the fact that Snapchat lent $2 million to Vergence.
Vergence is known for Epiphany Eyewear, a pair of glasses that can record video at a press of a button on the side of the frame. The gadget has either 8, 16 or 32 GB of internal storage available and they cost between $300 and $500. The glasses transfer the videos through a PC app and upload them online and also have Epiphany software which can capture still from the videos, since you can’t take photos with the glasses themselves. Epiphany Eyewear is older than Google Glass, being launched in 2011. While we don’t know what Snapchat is planning to do with Vergence, we have the details of the acquisition, as leaked from Michael Lynton’s inbox below.
> [cid:firstname.lastname@example.org]ACTION BY UNANIMOUS CONSENT
> VIA ELECTRONIC TRANSMISSION
> OF THE BOARD OF DIRECTORS
> Snapchat, INC.
> The undersigned, constituting all of the members of the Board of Directors (the “Board”) of Snapchat, Inc., a Delaware corporation (the “Company”), pursuant to Section 141(f) of the Delaware General Corporation Law and the Company’s bylaws (the “Bylaws”), hereby adopt the following resolutions by unanimous consent via electronic transmission:
> Approval of Stock Purchase Agreement
> Whereas, the Board has reviewed the proposed Stock Purchase Agreement (the “Stock Purchase Agreement”), among the Company, Vergence Labs, Inc. (the “Target”), the stockholders of Target and Erick Miller as the stockholders’ agent, in substantially the form of Exhibit A hereto, pursuant to which the Company would acquire all the shares of Target and Target will become a wholly-owned subsidiary of the Company (the “Transaction”);
> Whereas, the Board has discussed a proposal to acquire Target through the Transaction in exchange for an aggregate purchase price of up to $15,000,000 in cash that will be paid to Buyer in two separate payments, where the first of such payments will be paid to Buyer at the closing (the “Closing”) in an amount equal to $11,000,000 in cash, less (i) the Company’s transaction expenses and (ii) the amount required to repay that certain loan paid prior to the signing of the Transaction (the “Buyer Loan”) and the second of such payments in an amount equal to $4,000,000 in cash that will be held back at the Closing (the “Holdback Amount”) and be subject to monthly vesting over 24 months based on the continued employment of the stockholders with the Buyer pursuant to the terms set forth in the Stock Purchase Agreement (the “Purchase Price”);
> Whereas, based on its review of all relevant factors, including, without limitation, the terms of the Stock Purchase Agreement and related agreements, the Board believes that the Stock Purchase Agreement and related agreements are advisable to, and in the best interests of, the Company and the Company’s stockholders.
> Now, Therefore, Be It Resolved, that the Stock Purchase Agreement, as described to and in substantially the form presented to the Board, with such changes as the officers of the Company may approve, be, and it hereby is, authorized and approved;
> Resolved Further, that the officers of the Company be, and each of them hereby is, authorized and directed to continue to negotiate, and to execute and deliver on behalf of the Company, the Stock Purchase Agreement, the related agreements and any other agreements, certificates and documents any of such officers deems to be necessary or appropriate in connection with the contemplated Transaction (the Stock Purchase Agreement, the related agreements and any other agreements, certificates and documents that any of such officers deems to be necessary or appropriate in connection with the Transaction being referred to as the “Transactional Documents”), and to cause the Company to perform its obligations under the Transactional Documents;
> Resolved Further, that the officers of the Company be, and each of them hereby is, authorized and directed to take all other actions they may deem necessary or advisable to carry out the intent and accomplish the purposes of these resolutions; and
> Resolved Further, that all prior actions taken by the officers of the Company with respect to the preparation and negotiation of the Transactional Documents and otherwise in connection with effecting the purposes and intent of the Transactional Documents be, and each of them hereby is, authorized, ratified and approved.
> Ancillary Powers
> Resolved, that the officers of the Company be, and each of them hereby is, authorized and directed to take such actions and to execute all such documents that any of such officers deems to be necessary or appropriate to carry out the purposes of the foregoing resolutions; and
> Resolved Further, that the authority given in these resolutions is retroactive and any and all acts performed before the passage of these resolutions in connection with the Stock Purchase Agreement, the related agreements and the transactions contemplated thereby, or set forth in these resolutions, are hereby ratified and affirmed.