Vivani Medical, Inc PRE 14A, filed Apr 19, 2023

Vivani Medical, Inc. (VANI)

PRE 14A 2023-04-19 For: 2023-04-18

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☒	Preliminary Proxy Statement
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☐	Definitive Proxy Statement
☐	Definitive Additional Materials
☐	Soliciting Material Pursuant to §240.14a-12

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	6.	Proposal No. 4C: To approve a provision of the Delaware Bylaws permitting only the Board to call special meetings;

	7.	Proposal No. 4D: To approve provisions of the Delaware Charter and Bylaws disallowing action by written consent of stockholders;


THE PROXY PROCEDURE		5
ABOUT THE ANNUAL MEETING: QUESTIONS AND ANSWERS		7
GOVERNANCE OF THE COMPANY		13
PROPOSAL No. 1 — ELECTION OF DIRECTORS		17
PROPOSAL No. 2 — RATIFy ON ADVISORY BASIS the APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		20
PROPOSAL NO. 3 — REINCORPORATION FROM CALIFORNIA TO DELAWARE		22
GOVERNANCE PROVISIONS OF THE COMPANY’S CERTIFICATE OF INCORPORATION AND BYLAWS RELATING TO THE REINCORPORATION		29
PROPOSAL NO. 4A: PROVISION OF THE DELAWARE CHARTER DISALLOWING CUMULATIVE VOTING.		30
PROPOSAL NO. 4B: PROVISION OF THE DELAWARE CHARTER LIMITING THE COMPANY’S STOCKHOLDERS’ RIGHT TO REMOVE DIRECTORS WITHOUT CAUSE.		30
PROPOSAL NO. 4C: PROVISION OF THE DELAWARE BYLAWS PERMITTING ONLY THE BOARD TO CALL SPECIAL MEETINGS.		31
PROPOSAL NO. 4D: PROVISIONS OF THE DELAWARE CHARTER AND BYLAWS DISALLOWING ACTION BY WRITTEN CONSENT OF STOCKHOLDERS.		31
PROPOSAL NO. 4E: PROVISION OF THE DELAWARE CHARTER PROVIDING THAT, UNLESS VIVANI DELAWARE CONSENTS IN WRITING TO THE SELECTION OF AN ALTERNATE FORUM, CERTAIN INTRA-CORPORATE CLAIMS MAY BE BROUGHT EXCLUSIVELY IN THE DELAWARE COURT OF CHANCERY (OR, IF SUCH COURT LACKS SUBJECT MATTER JURISDICTION, THE OTHER STATE OR FEDERAL COURTS IN THE STATE OF DELAWARE).		32
PROPOSAL NO. 4F: PROVISION OF THE DELAWARE CHARTER REQUIRING ANY COMPLAINT ASSERTING A CAUSE OF ACTION UNDER THE SECURITIES ACT TO BE BROUGHT EXCLUSIVELY IN THE FEDERAL DISTRICT COURTS OF THE UNITED STATES, UNLESS THE COMPANY CONSENTS IN WRITING TO THE SELECTION OF AN ALTERNATIVE FORUM.		33
PROPOSAL NO. 5 — NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION		39
EXECUTIVE OFFICERS		40
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		48
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		50
STOCKHOLDER PROPOSALS		52
STOCKHOLDER MATTERS		53
DELINQUENT SECTION 16(a) REPORTS		54
REPORT OF the AUDIT COMMITTEE		55
APPENDIX A – PLAN OF CONVERSION
APPENDIX B – DELAWARE CERTIFICATE OF INCORPORATION
APPENDIX C – DELAWARE BYLAWS

Meeting Details	June 15, 2023, 10:00 a.m. Pacific Time
Virtual Meeting	To participate in the Annual Meeting virtually via the Internet, please visit: www.proxydocs.com/VANI. To access the Annual Meeting, you will need the 12-digit control number included on your Notice of Internet Availability of Proxy Materials, included on your proxy card, or provided through your broker. Stockholders will be able to vote and submit questions during the Annual Meeting.
Record Date	April 18, 2023
Shares Outstanding	There were 50,788,699 shares of common stock outstanding and entitled to vote as of the Record Date.
Eligibility to Vote	Holders of our common stock at the close of business on the Record Date are entitled to notice of, and to vote at, the Annual Meeting. Each stockholder is entitled to one vote for each share held as of the Record Date.
Quorum	A majority of the shares of common stock outstanding and entitled to vote, by proxy or via live webcast, as of the Record Date constitutes a quorum. A quorum is required to transact business at the Annual Meeting.
Voting Methods	Stockholders whose shares are registered in their names with Vstock Transfer, LLC, our transfer agent (referred to as “Stockholders of Record”) may vote by proxy via the Internet, phone, or mail by following the instructions on the accompanying proxy card. Stockholders of Record may also vote at the virtual Annual Meeting. Stockholders whose shares are held in “street name” by a broker, bank or other nominee (referred to as “Beneficial Owners”) must follow the voting instructions provided by their brokers or other nominees. See “What is the difference between holding shares as a Stockholder of Record and as a Beneficial Owner?” and “How do I vote and what are the voting deadlines?” below for additional information.

Inspector of Elections	We will appoint an independent Inspector of Elections to determine whether a quorum is present, and to tabulate the votes cast by proxy or at the Annual Meeting via live webcast.
Voting Results	We will announce preliminary results at the Annual Meeting. We will report final results on a Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) and post results at www.vivani.com as soon as practicable after the Annual Meeting.
Proxy Solicitation Costs	We will bear the costs of soliciting proxies from our stockholders. These costs include preparing, assembling, printing, mailing and distributing notices, proxy statements, proxy cards and Annual Reports. Our directors, officers and other employees may solicit proxies personally or by telephone, e-mail or other means of communication, and we will reimburse them for any related expenses. We will also reimburse brokers and other nominees for their reasonable out-of-pocket expenses for forwarding proxy materials to the Beneficial Owners of the shares that the nominees hold in their names.

●	You may vote via the Internet or by telephone. To vote via the Internet or by telephone, follow the instructions provided in the Notice or in the proxy card that accompanies this proxy statement. If you vote via the Internet or by telephone, you do not need to return a proxy card by mail. Internet and telephone voting are available 24 hours a day. Votes submitted through the Internet or by telephone must be received by 11:59 p.m. Eastern Time on June 14, 2023. Alternatively, you may request a printed proxy card by following the instructions provided in the Notice.
●	You may vote by mail. If you would like to vote by mail, you need to complete, date and sign the proxy card that accompanies this Proxy Statement and promptly mail it in the enclosed postage-paid envelope so that it is received no later than June 14, 2023. You do not need to put a stamp on the enclosed envelope if you mail it from within the United States. The persons named on the proxy card will vote the shares you own in accordance with your instructions on the proxy card you mail. If you return the proxy card, but do not give any instructions on a particular matter to be voted on at the Annual Meeting, the persons named on the proxy card will vote the shares you own in accordance with the recommendations of our board of directors. Our board of directors recommends that you vote FOR each of Proposal Nos. 1, 2, 3, 4A, 4B, 4C, 4D, 4E, 4F, and 5.
●	You may vote at the Annual Meeting. If you choose to vote at the Annual Meeting virtually, you will need the 12-digit control number included on your Notice or on your proxy card. If you are the beneficial owner of your shares, your 12-digit control number may be included in the voting instructions form that accompanied your proxy materials. If your nominee did not provide you with a 12-digit control number in the voting instructions form that accompanied your proxy materials, you may be able to log onto the website of your nominee prior to the start of the Annual Meeting, on which you will need to select the stockholder communications mailbox link through to the Annual Meeting, which will automatically populate your 12-digit control number in the virtual Annual Meeting interface. The method you use to vote will not limit your right to vote at the virtual Annual Meeting. All shares that have been properly voted and not revoked will be voted at the Annual Meeting.

	●	entering a new vote by Internet or telephone;
	●	signing and returning a new proxy card with a later date;
	●	delivering a written revocation to our Secretary at the address listed on the front page of this proxy statement; or

	●	FOR the election of the five directors nominated by our board of directors and named in this Proxy Statement as directors to serve for one-year terms (Proposal No. 1);
	●	FOR the ratification of the appointment of BPM LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023(Proposal No. 2);
	●	FOR the approval of the reincorporation pursuant to which the Company will change the state of its incorporation from California to Delaware (Proposal No. 3);
	●	FOR the approval of a provision of the Delaware Charter disallowing cumulative voting (Proposal No. 4A);
	●	FOR the approval of a provision of the Delaware Charter limiting the Company’s stockholders’ right to remove directors without cause (Proposal No. 4B);
	●	FOR the approval of a provision of the Delaware Bylaws permitting only the Board to call special meetings (Proposal No. 4C);
	●	FOR the approval of provisions of the Delaware Charter and Bylaws disallowing action by written consent of stockholders (Proposal No. 4D);
	●	FOR the approval of a provision of the Delaware Charter providing that, unless Vivani Delaware consents in writing to the selection of an alternate forum, certain intracorporate claims may be brought exclusively in the Delaware Court of Chancery (or, if such court lacks subject matter jurisdiction, the other state or federal courts in the State of Delaware) (Proposal No. 4E);
	●	FOR the approval of a provision of the Delaware Charter requiring any complaint asserting a cause of action under the Securities Act to be brought exclusively in the federal district courts of the United States, unless the Company consents in writing to the selection of an alternative forum (Proposal No. 4F);
	●	FOR, on a non-binding advisory basis, the approval of the compensation of our named executive officers (Proposal No. 5); and
		In the discretion of the named proxy holders regarding any other matters properly presented for a vote at the Annual Meeting.

Proposal	Vote Required	Effect of Abstentions	Routine or non-routine Broker Non-Votes
Proposal No. 1—Election of directors	Plurality of votes cast	No effect	This is not a routine matter. Broker non-votes will have no effect.
Proposal No. 2—Ratification of the appointment of the independent registered public accounting firm	Affirmative vote of a majority of the shares of common stock represented and voting at the annual meeting if the quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum)	Will have no effect, unless there are insufficient votes in favor of the proposal, such that the affirmative votes constitute less than a majority of the required quorum. In such cases, abstentions will have the same effect as a vote against such proposals.	This is a routine matter. Broker non-votes are not expected.
Proposal No. 3—Reincorporation from California to Delaware	Affirmative vote of a majority of the outstanding shares of common stock entitled to vote	Same effect as an “Against” vote	This is not a routine matter. Broker non-votes will have the same effect as an “Against” vote.
Proposal No. 4A— Provision of the Delaware Charter disallowing cumulative voting	Affirmative vote of a majority of the outstanding shares of common stock entitled to vote	Same effect as an “Against” vote	This is not a routine matter. Broker non-votes will have the same effect as an “Against” vote.
Proposal No. 4B—Provision of the Delaware Charter limiting the Company’s stockholders’ right to remove directors without cause	Affirmative vote of a majority of the outstanding shares of common stock entitled to vote	Same effect as an “Against” vote	This is not a routine matter. Broker non-votes will have the same effect as an “Against” vote.
Proposal No. 4C—Provision of the Delaware Bylaws permitting only the Board to call special meetings	Affirmative vote of a majority of the outstanding shares of common stock entitled to vote	Same effect as an “Against” vote	This is not a routine matter. Broker non-votes will have the same effect as an “Against” vote.
Proposal No. 4D— Provisions of the Delaware Charter and Bylaws disallowing action by written consent of stockholders	Affirmative vote of a majority of the outstanding shares of common stock entitled to vote	Same effect as an “Against” vote	This is not a routine matter. Broker non-votes will have the same effect as an “Against” vote.
Proposal No. 4E—Provision of the Delaware Charter providing that, unless Vivani Delaware consents in writing to the selection of an alternate forum, certain intracorporate claims may be brought exclusively in the Delaware Court of Chancery (or, if such court lacks subject matter jurisdiction, the other state or federal courts in the State of Delaware)	Affirmative vote of a majority of the outstanding shares of common stock entitled to vote	Same effect as an “Against” vote	This is not a routine matter. Broker non-votes will have the same effect as an “Against” vote.
Proposal No. 4F—Provision of the Delaware Charter requiring any complaint asserting a cause of action under the Securities Act to be brought exclusively in the federal district courts of the United States, unless the Company consents in writing to the selection of an alternative forum	Affirmative vote of a majority of the outstanding shares of common stock entitled to vote	Same effect as an “Against” vote	This is not a routine matter. Broker non-votes will have the same effect as an “Against” vote.
Proposal No. 5—Endorsement of the compensation of executive officers	Affirmative vote of a majority of the shares of common stock represented and voting at the annual meeting if the quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum)	No effect, unless there are insufficient votes in favor of the proposal, such that the affirmative votes constitute less than a majority of the required quorum. In such cases, abstentions will have the same effect as a vote against such proposals.	This is not a routine matter. Broker non-votes will have no effect.

Board Diversity Matrix (As of April 14, 2023)
Total Number of Directors	5
	Female	Male	Non-Binary	Did Not Disclose Gender
Part I: Gender Identity
Directors	1	4
Part II: Demographic Background
African American or Black
Alaskan Native or Native American
Asian
Hispanic or Latinx
Native Hawaiian or Pacific Islander
White	1	4
Two or More Races or Ethnicities
LGBTQ+
Did Not Disclose Demographic Background

Nominee’s or Director’s Name	Age	Year First Became Director	Position with the Company
Gregg Williams ^(1)(2)(3*)	64	2009	Independent Director, Chairman of the Board
Aaron Mendelsohn	71	1998	Director
Dean Baker^(1)(2)(3)	80	2021	Independent Director
Alexandra Larson^(1)(2)(3)	43	2021	Independent Director
Adam Mendelsohn	41	2022	Director, Chief Executive Officer

	Annual Retainer
Board of Directors:
All nonemployee members	$	35,000
Additional retainer for Non-Executive Chairman of the Board	$	55,000
Audit Committee:
Chairman	$	20,000
Non-Chairman members	$	10,000
Compensation Committee:
Chairman	$	12,000
Non-Chairman members	$	6,000
Nominating Committee:
Chairman	$	8,000
Non-Chairman members	$	4,000

Name	Fees Earned or Paid in Cash		Option Awards⁽¹⁾⁽²⁾		Total
Gregg Williams	$	35,910	$	19,750	$	55,660
Aaron Mendelsohn	$	47,985		—	$	47,985
Alexandra Larson	$	106,100	$	8,750	$	114,850
W. Dean Baker	$	62,902		—	$	62,902
Matthew Pfeffer	$	69,825		—	$	69,825
Will McGuire	$	56,525		—	$	56,525

	December 31, 2022
Audit Fees⁽¹⁾	$	217,228
Audit Related Fees⁽²⁾	$	230,917
Tax Fees⁽³⁾	$	—
All Other Fees⁽⁴⁾	$	13,910
Total Fees	$	462,055

1.	“Audit Fees” are the aggregate fees of BPM LLP attributable to professional services rendered to us for the audit of our annual consolidated financial statements and review of quarterly financial information.
2.	“Audit-Related Fees” consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported above under “Audit Fees.”
3.	“Tax Fees” consist of fees billed for services rendered for tax compliance, tax advice, and tax planning.
4.	“All Other Fees” consist of fees billed for services other than the services reported in Audit Fees, Audit-Related Fees, and Tax Fees.

	•	*Election of Directors*: Vivani would continue to have annual election of all members of its Board of Directors rather than have a classified or staggered board.
	•	*Amendment of Bylaws*: Include the ability of stockholders to amend Vivani’s bylaws by simple majority.

	●	greater predictability, flexibility and responsiveness of Delaware law to corporate needs;

	●	access to specialized courts;

	●	enhanced ability of Delaware corporations to attract and retain directors and officers; and

	●	more certainty with respect to indemnification and limitation of liability for directors.

	•	Corporations (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or of any state of the United States or the District of Columbia;
	•	Estates, the income of which is subject to U.S. federal income taxation regardless of its source;
	•	Trusts, if a court within the United States is able to exercise primary supervision over the administration of any such trust and one or more U.S. persons have the authority to control all substantial decisions of such trust; or
	•	Trusts in existence on August 20, 1996, that have valid elections in effect under applicable Treasury regulations to be treated as U.S. persons.

	•	The Reincorporation will constitute a tax-free reorganization under Section 368(a) of the Code;
	•	No gain or loss will be recognized by holders of Vivani California common stock on receipt of Vivani Delaware common stock pursuant to the Reincorporation;
	•	The aggregate tax basis of Vivani Delaware common stock received by each holder will equal the aggregate tax basis of the Vivani California common stock surrendered by such holder in exchange therefor; and
	•	The holding period of the Vivani Delaware common stock received by each holder will include the period during which such holder held the Vivani California common stock surrendered in exchange therefor.

Provision		Current California Provision		Proposed Change for Reincorporation
Authorized Shares		300 million shares of common stock, no par value; 10 million shares of Preferred Stock, no par value.		300 million shares of common stock, par value $0.0001; 10 million shares of Preferred Stock, par value $0.0001, none of which are designated.

Name and Principal Position	Year	Salary ($)⁽¹⁾		Bonus ($)⁽²⁾		Option Awards ($)⁽³⁾		All Other Compensation ($)⁽⁴⁾		Total ($)

Adam Mendelsohn,	2022		300,000		—		—		12,014		312,014
Chief Executive Officer	2021		300,000		—		—		8,300		308,300

Brigid Makes, Chief Financial Officer	2022		196,644		—		101,383		7,982		306,009

Truc Le,	2022		300,000		25,000		—		12,200		337,200
Chief Operating Officer	2021		300,000		—		241,674		11,000		552,674

Scott Dunbar, Former	2022		295,938		79,433		3,575		3,207		382,153
Chief Executive Officer	2021		234,544		66,845		—		4,296		305,685

(1)	Represents the base salary amount for each of the named executive officers for the applicable year.
(2)	Represents the amounts payable as discretionary cash bonuses for the applicable year.
(3)	Represents the aggregate grant date fair value of stock option awards granted during the applicable year prorated for respective start dates as measured pursuant to ASC Topic 718 as stock-based compensation in our consolidated financial statements. This calculation does not give effect to any estimate of forfeitures related to service-based vesting and assumes that the executive will perform the requisite service for the award to vest in full.
(4)	Includes employer matching contributions to the named executive officers under the Company 401(k) plan.

	OPTION AWARDS
Name	Option Grant Date	Number of Securities Underlying Unexercised Options Exercisable		Number of Securities Underlying Unexercised Options Unexercisable		Option Exercise Price ($)

Adam Mendelsohn	11/14/2018	60,373	⁽¹⁾	—		3.15

Brigid Makes	9/14/2022	13,583	⁽¹⁾	—		2.80
	11/7/2022	1,041		48,959	⁽²⁾	1.77

Truc Le	7/23/2020	526,080		77,652	⁽³⁾	3.15
	3/8/2021	66,033		84,900	⁽²⁾	3.15

Scott Dunbar	4/1/2014	312	⁽¹⁾			120.00
	9/26/2014	1,768	⁽¹⁾			216.00
	3/25/2015	208	⁽¹⁾			314.16
	1/21/2016	384	⁽¹⁾			98.40
	1/18/2017	833	⁽¹⁾			41.52
	1/2/2018	833	⁽¹⁾			48.24
	1/23/2018	1,367	⁽¹⁾			19.56
	2/12/2020	1,375	⁽¹⁾			17.94
	11/7/2022	—		2,500	⁽⁴⁾	1.77

	Equity Compensation Plan Information
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (#)		Weighted average exercise price of outstanding options, warrants and rights ($)		Number of securities remaining available for future issuance under equity compensation plans (#)
Equity compensation plans approved by security holders⁽¹⁾		5,272,014	$	3.07		4,875,140
Equity compensation plans not approved by security holders		—		—		—
Total		5,272,014	$	3.07		4,875,140


	Summary		Summary		Average Summary	Average
	Compensation	Compensation	Compensation	Compensation	Compensation	Compensation	Total
Fiscal	Table Total	Actually Paid	Table Total	Actually Paid	Table Total	Actually Paid	Shareholder
Year	for PEO¹	to PEO²	for PEO 2¹	to PEO 2²	for non-PEO NEOs³	to non-PEO NEOs²	Return⁴	Net Income
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)
2022	$312,014	$292,957	$382,153	$379,269	$321,605	($70,376)	$20.52	($13,889,000)

			Grant Date Value of	Year End Value of	Change in Value of	Change in Value of	TOTAL
Fiscal Year		SCT (a)	New Awards (b)	New Awards (i)	Prior Awards (ii)	Vested Awards (iii)	Equity CAP (c)=(i)+(ii)+(iii)	CAP (d) =(a)-(b)+(c)
2022	PEO	$312,014	$0	$0	$0	($19,057)	($19,057)	$292,957
	PEO 2	$382,153	($3,575)	$1,519	$0	($829)	$691	$379,269
	NEOs	$321,605	($50,692)	$14,826	($312,905)	($43,210)	($341,289)	($70,376)

	●	each of our current directors;

	●	each of our current named executive officers;

	●	all of our directors and executive officers as a group; and

	●	each person known by us to beneficially own 5% or more of our common stock.

Name and address of Beneficial Owners	Number of Shares Beneficially Owned		Percentage of Shares Beneficially Owned
10% Stockholders
Joachim & Yaeko Bolck⁽¹⁾		5,396,723		10.6
Directors and Executive Officers
Gregg Williams⁽²⁾		21,556,636		35.5
Adam Mendelsohn⁽³⁾		3,809,305		7.5
Aaron Mendelsohn⁽⁴⁾		1,196,419		2.4
Truc Le⁽⁵⁾		629,405		1.2
Dean Baker⁽⁶⁾		288,043		*
Brigid A. Makes⁽⁷⁾		19,833		*
Scott Dunbar⁽⁸⁾		10,398		*
Alexandra Larson⁽⁹⁾		4,030		*
All current directors and executive officers as a group (10 persons)		28,220,372

Name of Director	Ownership of NPM Common Stock
Gregg Williams	31.84%
Dean Baker	0.58%
Aaron Mendelsohn	1.79%

	●	reviewed and discussed the Company’s audited consolidated financial statements for the year ended December 31, 2022, with management and with the Company’s independent registered public accounting firm, BPM LLP;

	●	discussed with the Company’s independent auditors the matters required to be discussed by Statement on Auditing Standards No. 1301, “Communications with Audit Committees”, as adopted by the Public Company Accounting Oversight Board (“PCAOB”); and

	●	received and reviewed the written disclosures and letter from the independent auditors required by the PCAOB regarding the independent auditors’ communications with the Audit Committee concerning independence and has discussed with BPM LLP matters relating to its independence from the Company and its management.

	Vivani Medical, Inc.

	By:
	Name:	Adam Mendelsohn
	Title:	Chief Executive Officer