ITEM
10. Directors, Executive Officers and Corporate Governance
Directors
The
following table sets forth certain information about the current directors of our Company. Directors are elected to hold office
until the next annual meeting of stockholders or special meeting in lieu of such annual meeting or until their successors are
elected and qualified or until their earlier deaths, resignations, or removal.
Our Board of
Directors (the “Board”) may consider a broad range of factors relating to the qualifications and background of nominees,
which may include diversity, which is not only limited to race, gender or national origin. We have no formal policy regarding
Board diversity. Our Board’s priority in selecting Board members is identification of persons who will further the interests
of our stockholders through his or her established record of professional accomplishment, the ability to contribute positively
to the collaborative culture among Board members, knowledge of our business, understanding of the competitive landscape and professional
and personal experiences and expertise relevant to our growth strategy.
The
following provides information regarding our directors and officers during 2021:
Nominee’s or
Director’s Name
|
Year First
Became
Director |
|
Position with the Company |
Gregg
Williams |
|
2009 |
|
Independent
Director, Non-Executive Chairman |
Dean
Baker |
|
2021 |
|
Independent
Director |
Alexandra
Larson |
|
2021 |
|
Independent
Director |
Jonathan
Will McGuire1 |
|
2015 |
|
Director |
Aaron
Mendelsohn |
|
1998 |
|
Independent
Director |
Matthew
Pfeffer1 |
|
2015 |
|
Independent
Director |
1 |
Mr.
Pfeffer was appointed acting Chief Executive Officer of the Company on March 27, 2020 after Gregg Williams served briefly as
acting Chief Executive Officer from March 8, 2020 to March 27, 2020, following Mr. McGuire’s resignation as chief
executive officer and resigned as Acting Chief Executive Officer effective March 26, 2021. He has since that date in
accord with the Nasdaq Listing Rules resumed his status as an independent director. |
The
following biographical descriptions set forth certain information with respect to the directors of our Board, based on information
furnished to us by each director.
Gregg
Williams, 63, Chairman of the Board of Directors
Mr. Williams has served as a member of
our Board since June 2009 and was appointed Chairman of our board in March 2018. Mr. Williams is the Chairman,
President, and Chief Executive Officer at Williams International Co., LLC (“Williams International”) (www.williams-int.com),
a leading developer and manufacturer of gas turbine engines and one of the largest privately owned companies in the aviation industry,
positions he has held since July 1999. Previously, Mr. Williams held several key managerial positions within Williams International
including serving as its President and Chief Operating Officer, Vice President, Advanced Technology, Director, Program Management
and Director, Engineering. In addition, Mr. Williams is Chairman and majority owner of Ramos Arizpe Manufacturing (www.ram-mx.com),
a high volume automotive engine parts manufacturing company located in Mexico. Mr. Williams also is a member of the board of directors
of Nano Precision Medical, Inc. (www.nanoprecisionmedical.com), a drug delivery company working in nanotechnology. Mr. Williams
received a Bachelor of Science in Mechanical Engineering from the University of Utah and holds numerous patents related to gas
turbine engines, turbo machinery, rocket engines and control systems. He is a board member of General Aviation Manufacturers Association
and former member of the Henry Ford Hospital Board.
Our
Board believes Mr. Williams is qualified to serve on the Company’s board of directors due to his business and senior management
experience, extensive knowledge of Second Sight’s operations and deep background in technology-focused manufacturing companies
which is highly relevant to the Company.
Dean
Baker, 79, Director
Dr.
Baker has served on the Board of Directors of Nano Precision Medical, Inc., a drug delivery company working in nanotechnology,
since 2013 and on the Board of Directors of Transonic Imaging, a medical imaging startup, since 2018. Mr. Baker served on the
Board of Directors of Advanced Bionics, a global leader in developing advanced cochlear implant systems, prior to its sale to
Boston Scientific, a manufacturer of medical devices. In addition, he was the founding director of the Alfred E. Mann Institute
for Biomedical Engineering at USC, and served for nine years on the Board of Directors (including serving on compensation, audit,
and governance committees) for Semtech, a publicly traded semiconductor company. Dr. Baker was also a vice president of Northrop
Grumman, a multinational aerospace and defense technology company, for 16 years from 1983 to 1999 including
overseeing a division with $1 billion in annual sales.
Our
Board believes Dr. Baker is qualified to serve on the Company’s board of directors because of his experience as a director
on multiple boards and his scientific background.
Alexandra
Larson, 42, Director
Ms. Larson serves as Vice President and
General Counsel of Williams International, a privately-held designer and manufacturer in the aerospace and defense industry, since
January 2019. Prior to Williams International, from 2013 to January 2019, Ms. Larson was Legal Director and Associate General
Counsel at Amcor, a global packaging company. Ms. Larson also served as Corporate Counsel at Compuware Corporation, a software
company with products aimed at the information technology departments of large businesses, from 2012 to 2013, and Associate in
the mergers & acquisitions practice of the global law firm Baker and McKenzie, in its New York office, from 2008 to 2012. Ms. Larson has worked at the New York Stock Exchange and the United States Department
of Justice, Antitrust Division. Ms. Larson is a graduate of the University of Michigan Law School (Ann Arbor), Hamilton College
in Clinton, New York, and the University of Tennessee, Knoxville Haslam College of Business’s Aerospace & Defense MBA Program.
Our Board believes Ms. Larson is qualified
to serve on the Company’s board of directors due to her legal experience and leadership skills.
Jonathan
Will McGuire, 59, Director
Mr. McGuire has served as Chief
Executive Officer and member of the board of directors of RA Medical Systems, a medical device company, since 2020. Prior to
that, Mr. McGuire served as our President and Chief Executive Officer from August 2015 to March 2020. Prior to that, Mr.
McGuire served at Volcano Corporation, where he was President of Americas Commercial since 2014 and prior to that, Senior
Vice President and General Manager of Coronary Imaging, Systems and Program Management since 2013. Volcano, a global leader
in intravascular imaging for coronary and peripheral applications and physiology, was acquired by Royal Philips in February
2015. Before joining Volcano, Mr. McGuire served as Vice President and General Manager of Patient Monitoring at Covidien, a
global health care products company, in 2012. He previously served as President and Chief Executive Officer of AtheroMed,
Inc., a venture capital-backed peripheral atherectomy company, from 2010 to 2012. From 2005 to 2010, he was Chief Operating
Officer at Spectranetics Corporation, a publicly-traded medical device company. In addition, Mr. McGuire held various
positions at Guidant Corporation, a manufacturer of cardiovascular medical products, from 1998 to 2005 including General
Manager of Guidant Latin America; Director of U.S. Marketing for Vascular Intervention (VI); Director of Global Marketing for
VI; and, Production Manager for Coronary Stents. From 1995 to 1996, Mr. McGuire held positions in Finance and Production at
IVAC Medical Systems, a manufacturer of infusion therapy products. A graduate of the Georgia Institute of Technology, Mr.
McGuire received his M.B.A. from the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.
Our Board
believes Mr. McGuire is qualified to serve on the Company’s board of directors because of his leadership, senior management history, experience in the medical
device industry and deep knowledge of the Company’s affairs.
Aaron
Mendelsohn, 70, Director
Mr. Mendelsohn is a founder and has served
as a director of Second Sight since its inception in 2003. Mr. Mendelsohn served on the board of Advanced Bionics, a global leader
in developing advanced cochlear implant systems, since shortly after its founding in 1993 until its sale in 2004 to Boston Scientific
Corp. Mr. Mendelsohn was also a founder and director of Medical Research Group, Inc., a company that designed and manufactured
implantable technologies primarily for the treatment of diabetes, from its inception in 1998 until its sale in 2001 to Medtronic,
Inc. Mr. Mendelsohn previously served on the board of directors for the Alfred E. Mann Institute for Biomedical Engineering
at the University of Southern California since its inception in 1998 until 2016. He is also a founder and director of Nano Precision
Medical, Inc., a drug delivery company working in nanotechnology, where he has served since 2011. Mr. Mendelsohn is a founder
and has served as Chairman of the Maestro Foundation since it was organized in 1983. The Maestro Foundation is a leading non-profit
musical philanthropic organization which hosts a premier chamber music series and lends professional-level instruments and bows
to young, career-bound classical musicians. Mr. Mendelsohn received his B.A. from UCLA and J.D. from Loyola University School
of Law Los Angeles.
Our Board believes that Mr. Mendelsohn’s
business experience, including his experience as a founder, board member and executive officer of medical device companies, combined
with his financial experience, business acumen, and judgment provide our Board with valuable managerial and operational expertise
and leadership skills making him well qualified to continue serving as one of our directors.
Matthew
Pfeffer, 65, Director
Mr.
Pfeffer has served as a member of our Board since 2015. Mr. Pfeffer served as acting chief executive officer of
the Company from March 27, 2020 to March 26, 2021. Mr. Pfeffer served as a member of the board of directors of
MannKind Corporation, a biopharmaceutical company, from January 2016 through October 2017, and served as a special adviser to
that company from November 2017 through February 2019. He served as Chief Executive Officer and Chief Financial
Officer of MannKind from January 2016 through May 2017, and as Corporate Vice President and Chief Financial Officer of
MannKind from April 2008 until January 2016. Previously, Mr. Pfeffer served as Chief Financial Officer and Senior Vice
President of Finance and Administration of VaxGen, Inc., a biopharmaceutical company, from March 2006 until April 2008, with
responsibility for finance, tax, treasury, human resources, information technology, purchasing and facilities functions.
Prior to VaxGen, Mr. Pfeffer served as Chief Financial Officer of Cell Genesys, Inc., a biotechnology company from 1995
to 2005. During his tenure at Cell Genesys, Mr. Pfeffer served as Director of Finance before being named Chief Financial
Officer. Prior to that, Mr. Pfeffer served in a variety of financial management positions at other companies, including
roles as Corporate Controller from 1993 to 1995 and Manager
of Internal Audit from 1989 to 1992. Before that, he served as Manager of Financial Reporting and Consolidations at
ComputerLand Corporation a leading retailer of computer systems and related products. Mr. Pfeffer began his career
at PricewaterhouseCoopers, a multinational professional services network where he worked in the auditing and
consulting organizations from 1981 to 1987. Mr. Pfeffer graduated from the University of California, Berkeley, and is a
Certified Public Accountant.
Our Board believes
that Mr. Pfeffer’s senior executive, financial and accounting experience together with his deep knowledge of the Company’s affairs make him well qualified
to continue serving as one of our directors.
Executive
Officers
The
following table sets forth certain information regarding our executive officers:
Name
of Individual |
|
Age |
|
Position
and Office |
Scott
Dunbar1 |
|
65 |
|
Acting
Chief Executive Officer |
Jessy
Dorn |
|
46 |
|
Vice
President of Clinical and Scientific Affairs |
Edward
Randolph |
|
64 |
|
Chief
Operating Officer |
Edward
Sedo2 |
|
66 |
|
Acting
Chief Accounting Officer |
1 |
Mr.
Dunbar was named Acting Chief Executive Officer of the Company effective March 2021. |
2 |
Mr.
Sedo was named Acting Chief Accounting Officer of the Company effective September 2020. |
Our
executive officers are appointed by, and serve at the discretion of, our Board. The business experience for the past five years,
and in some instances, for prior years, of each of our executive officers is as follows:
Scott
Dunbar
Mr. Dunbar, 65,
has served Second Sight for 20 years as Patent Counsel, Senior Patent Counsel, and Senior Patent Counsel and Compliance Officer. He
was named Acting CEO by the Board on March 26, 2021. Prior to Second Sight, in 2000 he was Of Counsel at Katten Muchin
and Zavis (now Katten Muchin and Rosenman), a law firm, during 1999 he was Of Counsel at Fitch Even Tabin and Flannery, a law
firm, from 1997 to 1999 he was Patent Counsel at Packard Bell, a computer manufacturing brand, and from 1987 to 1997 he was Patent
Counsel at Zenith Data Systems, a computer company. Mr. Dunbar received a Juris Doctor from the John Marshall Law School,
a Master of Science in Computer Science from Illinois Institute of Technology and a BA in Music from DePauw University.
Jessy
Dorn
Dr .
Dorn, 46, joined Second Sight in November 2006. As Vice President of Clinical and Scientific Affairs, she leads the effort to
understand and improve the artificial vision created by the Orion and Argus II Systems. Her work encompasses clinical research
strategy, principles of neurostimulation, low vision outcome measures, and human visual psychophysics. Prior to joining Second
Sight she worked as an Assistant Curator at the California Science Center, a state agency and museum, from 2004 to 2006; as a
freelance science editor in 2003, and as a technical writer in 2001. She received her Ph.D. in Neuroscience from UCLA, studying
primate visual cortex, and her BA in Biology from the University of Chicago.
Edward
Randolph
Mr.
Randolph, 64, has served as Vice President, Operations since September 14, 2020 and served as our Vice President of Manufacturing
since 2007. From 2003 to 2007, Mr. Randolph was Director of Manufacturing Engineering at Boston Scientific Corp., a worldwide
manufacturer of medical devices and products. From 2001 to 2003, Mr. Randolph was a Director of Manufacturing Engineering at Cygnus,
Inc., a manufacturer of non-invasive transdermal drug delivery systems. Mr. Randolph received his Master of Science in Engineering
from Stanford University and his Bachelor of Science in Architecture from Massachusetts Institute of Technology.
Edward
Sedo
Edward Sedo, 66, has served as our Acting Chief Accounting
Officer since September 2020. Prior to that Mr. Sedo served as our Manager of Financial Reporting since February 2015. Prior to
that Mr. Sedo served as Assistant Controller at Calavo Growers a publicly-traded produce company from March 2008 to November 2014.
Mr. Sedo served as the VP, Financial Reporting at Countrywide Financial Corporation a publicly-traded mortgage company, from December
2004 to March 2008. Mr. Sedo is a Certified Public Accountant and holds a BBA in accounting from the University of Michigan-Dearborn.
Family Relationship
There
are no family relationships among any of our directors and executive officers.
Corporate
Governance
The
Board of Directors and Its Committees
Our
business, property and affairs are managed by, or under the direction of, our Board, in accordance with the California Corporations
Code and our Bylaws. Members of the Board are kept informed of our business through discussions with the Chief Executive Officer
and other key members of management, by reviewing materials provided to them by management, and by participating in regular and
special meetings of the Board and its Committees.
Shareholders
may communicate with the members of the Board, either individually or collectively, or with any independent directors as a group
by writing to the Board at 13170 Telfair Avenue, Sylmar, California 91342. These communications will be reviewed by the office
of the Corporate Secretary who, depending on the subject matter, will (a) forward the communication to the director or directors
to whom it is addressed or who is responsible for the topic matter, (b) attempt to address the inquiry directly (for example,
where it is a request for publicly available information or a stock related matter that does not require the attention of a director),
or (c) not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic.
At each meeting of the Nominating and Governance Committee, the Corporate Secretary presents a summary of communications received
and will make those communications available to any director upon request.
Independence
of Directors
The Nasdaq Listing Rules require a majority
of a listed company’s Board of Directors to be comprised of independent directors. In addition, the Nasdaq Listing Rules
require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and
corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in
Rule 10A-3 under the Exchange Act.
Under Rule 5605(a)(2) of the Nasdaq Listing
Rules, a director will only qualify as an “independent director” if, in the opinion of our Board of Directors, that
person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. In order to be considered independent for purposes of Rule 10A-3 of the Exchange Act, a member of an audit committee
of a listed company may not, other than in his or her capacity as a member of the audit committee, the Board of Directors, or
any other Board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed
company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries.
Our
Board of Directors has reviewed the composition of our Board of Directors and the independence of each director. Based upon information
requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships,
our Board has determined that each of the directors currently serving on the Board with the exception of Will McGuire, who was
employed as our Chief Executive Officer and President until March 27, 2020 are independent directors under the Nasdaq Listing
Rules. Our Board of Directors also determined that the directors who serve on our audit committee, our compensation committee,
and our nominating and corporate governance committee satisfy the independence standards for such committees established by the
SEC and the Nasdaq Listing Rules, as applicable. In making such determinations, our Board of Directors considered the relationships
that each such non-employee director has with our company and all other facts and circumstances our Board of Directors deemed
relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director.
Board
Meetings and Committees of our Board
The
Board has three standing committees each of which has the composition described below and responsibilities that satisfy
the independence standards of the Securities Exchange Act of 1934 and the Nasdaq Listing Rules: (i) the Audit Committee, (ii)
the Compensation Committee, and (iii) the Nominating and Governance Committee. Mr. Dean Baker was Chairman of the Audit Committee,
Mr. Matthew Pfeffer was Chairman of the Compensation Committee, and Mr. Aaron Mendelsohn was Chairman of the Nominating and Governance
Committee. During the year ended December 31, 2021, the Board held 22 meetings, the Audit Committee held four meetings, the Compensation
Committee held one meeting, and the Nominating and Governance Committee held no meetings .
Each of our directors attended at least 75% of the combined Board meetings and meetings of the Board committee(s) of which he
or she is a member.
Each of the above committees has a written
charter approved by our Board. Copies of each charter are posted on the investor relations section of our website www.secondsight.com.
Each of the committees reports to our Board of Directors as such committee deems appropriate and as our Board of Directors may
request. Members serve on these committees until their resignation or until otherwise determined by our Board of Directors. In
addition, from time to time, special committees may be established under the direction of our Board of Directors when necessary
to address specific issues.
Audit
Committee
The Audit Committee was comprised of Matthew
Pfeffer, Gregg Williams, Aaron Mendelsohn, and Dean Baker four non-employee directors, each of whom are “independent”
as defined under section 5605(a)(2) of the Nasdaq Listing Rules. Mr. Baker served as chair of the Audit Committee. In addition,
the Board has determined that both Mr. Pfeffer and Mr. Williams qualify as an “audit committee financial expert” as
that term is defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Exchange Act of 1934, as amended. The Audit
Committee’s responsibilities include:
|
● |
overseeing
management’s preparation of our financial statements and management’s conduct of the accounting and financial
reporting processes; |
|
● |
overseeing
management’s maintenance of internal controls and procedures for financial reporting; |
|
● |
overseeing
our compliance with applicable legal and regulatory requirements, including without limitation, those requirements relating
to financial controls and reporting; |
|
● |
selecting
a firm to serve as the independent registered public accounting firm to audit our financial statements |
|
|
|
|
● |
overseeing
the independent auditor’s qualifications and independence; |
|
● |
overseeing
the performance of the independent auditors, including the annual independent audit of our financial statements; |
|
● |
preparing
the report required by the rules of the SEC to be included in our Proxy Statement; and |
|
● |
discharging
such duties and responsibilities as may be required of the Audit Committee by the provisions of applicable law, rule or regulation. |
A
copy of the charter of the Audit Committee is available on our website at www.secondsight.com (under “Investors
– Corporate Governance”).
Compensation
Committee
The Compensation Committee consisted of
Aaron Mendelsohn, Gregg Williams, Dean Baker and Matthew Pfeffer, four non-employee directors, each of whom we deemed to be “independent”
as defined in section 5605(a)(2) of the Nasdaq Listing Rules. The role of the Compensation Committee is, among other responsibilities,
to:
|
● |
review
annually the Company’s overall compensation strategy, including base salary, incentive compensation and equity based grants,
to assure that it promotes stockholder interests and supports the Company’s strategic and tactical objectives; |
|
|
|
|
● |
review annually and approve the factors to be considered
in determining the compensation of the Chief Executive Officer of the Company and the Company’s other “executive
officers;” |
|
● |
review,
approve and recommend to the Board the annual compensation (base salary, bonus, equity compensation and other benefits) for
all of our executives; |
|
● |
review,
approve and recommend to the Board the aggregate number of equity awards to be granted to employees below the executive level; |
|
● |
oversee
the Company’s compliance with regulatory requirements associated with compensation matters; and |
|
● |
review
and issue recommendations on compensation matters disclosure in the Company’s Annual Reports on Form 10-K, proxy statements,
information statements, and other documents filed with the SEC. |
A
copy of the charter of the Compensation Committee is available on our website at www.secondsight.com (under “Investors
– Corporate Governance”).
The
Compensation Committee may form and delegate a subcommittee consisting of one or more members to perform the functions of the
Compensation Committee. The Compensation Committee may engage outside advisers, including outside auditors, attorneys and consultants,
as it deems necessary to discharge its responsibilities. The Compensation Committee has sole authority to retain and terminate
any compensation expert or consultant to be used to provide advice on compensation levels or assist in the evaluation of director,
President/Chief Executive Officer or senior executive compensation, including sole authority to approve the fees of any expert
or consultant and other retention terms. In addition, the Compensation Committee considers, but is not bound by, the recommendations
of our Chief Executive Officer with respect to the compensation packages of our other executive officers.
Nominating
and Governance Committee
The Nominating and
Governance Committee consisted of Alexandra Larson, Aaron Mendelsohn and Gregg Williams, three non-employee directors, each
of whom were deemed to be “independent” as defined in section 5605(a)(2) of the Nasdaq Listing Rules. The
Nominating and Governance Committee held no meetings during 2021. The role of the Nominating and Governance Committee is
to:
|
● |
evaluate
from time to time the appropriate size (number of members) of the Board and recommend any increase or decrease; |
|
● |
determine
the desired skills and attributes of members of the Board, taking into account the needs of the business and listing standards; |
|
● |
establish
criteria for prospective members, conduct candidate searches, interview prospective candidates, and oversee programs to introduce
the candidate to us, our management, and operations; |
|
● |
review
planning for succession to the position of Chairman of the Board and Chief Executive Officer and other senior management positions; |
|
● |
annually
recommend to the Board persons to be nominated for election as directors; |
|
● |
recommend
to the Board the members of all standing Committees; |
|
● |
adopt
or develop for Board consideration corporate governance principles and policies; and
|
|
● |
periodically
review and report to the Board on the effectiveness of corporate governance procedures and the Board as a governing body. |
A
copy of the charter of the Nominating and Governance Committee is available on our website www.secondsight.com (under “Investors
– Corporate Governance”).
Policy
with Regard to Security Holder Recommendations
The Nominating and Governance Committee
has a policy with regards to consideration of director candidates recommended by security holders. For the recommendation of a
security holder to be considered under this policy, the recommending shareholder or group of shareholders must have held at least
three percent of Company’s voting common stock for at least one year as of the date the recommendation was made. For each
annual meeting of shareholders, the Nominating and Governance Committee will accept for consideration only one recommendation
from any shareholder or affiliated group of shareholders. The Nominating and Governance Committee will also consider the extent
to which the shareholder making the nominating recommendation intends to maintain its ownership interest in Company. Any director
nominated must represent the interests of all shareholders and not serve for the purpose of favoring or advancing the interests
of any particular shareholder group or other constituency. All recommendations submitted by shareholders will be considered in
the same manner and under the same process as any other recommendations submitted from other sources.
All shareholder nominating recommendations
must be in writing. Submissions must be made by mail, courier or personal delivery, addressed to the Nominating and Governance
Committee care of Company’s corporate secretary at Company’s principal offices. Recommendations must include certain
information regarding the recommending shareholder(s) and the proposed nominee. The recommending shareholder must state whether,
in the view of the shareholder, the nominee, if elected, would represent all shareholders and not serve for the purpose of advancing
or favoring any particular shareholder or other constituency of Company. The nominating recommendation must be accompanied by
the written consent of the proposed nominee to: (a) be considered by the Nominating and Governance Committee and interviewed,
and (b) if nominated and elected, to serve as a director.
No security holder (other than members
of the Nominating and Governance Committee) has recommended a candidate to date.
Director
Qualifications and Diversity
Our
Board of Directors is currently chaired by Gregg Williams. Our Board of Directors does not have a policy regarding the separation
of the roles of Chief Executive Officer and Chairman of the Board of Directors, as our Board of Directors believes it is in our
best interest to make that determination based on our position and direction and the membership of the Board of Directors. The
Board seeks independent directors who represent a diversity of backgrounds and experiences that will enhance the quality of the
Board’s deliberations and decisions who each will represent the best interests of the Company and its shareholders. Candidates
should have substantial experience with one or more publicly traded companies or should have achieved a high level of distinction
in their chosen fields. The Board is particularly interested in maintaining a mix that includes individuals who are active or
retired executive officers and senior executives, particularly those with experience in medical devices, biotechnology, intellectual
property, early stage technology companies, research and development, strategic planning, business development, compensation,
finance, accounting or banking.
Our
Board believes that the directors nominated collectively have the experience and skills effectively to oversee the management
of the Company, including a high level of personal and professional integrity, an ability to exercise sound business judgement
on a broad range of issues, sufficient experience and background to have an appreciation of the issues facing the Company, and
a willingness to devote the necessary time to Board duties.
Compensation
Committee Interlocks and Insider Participation
During
2021, Messrs. Dean Baker, Gregg Williams, Matthew Pfeffer and Aaron Mendelsohn served on the Compensation Committee. None of our
executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive
officers serving as a member of our Board or the Compensation Committee.
Code
of Conduct
We
adopted a Code of Business Conduct and Ethics (“Code of Ethics”) applicable to our principal executive officer and
principal financial and accounting officer and any persons performing similar functions. In addition, the Code of Ethics applies
to our employees, officers, directors, agents and representatives. The Code of Ethics requires, among other things, that our employees
avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner,
and otherwise act with integrity and in our best interest. The Code of Ethics is available on our website at www.secondsight.com (under
“Investors – Code of Business Conduct and Ethics”).
Risk
Oversight
Our
Board of Directors oversees the management of risks inherent in the operation of our business and the implementation of our business
strategies. Our Board of Directors performs this oversight role by using several different levels of review. In connection with
its reviews of our operations and corporate functions, our Board of Directors addresses the primary risks associated with those
operations and corporate functions. In addition, our Board of Directors reviews the risks associated with our business strategies
periodically throughout the year as part of its consideration of undertaking any such business strategies. Enterprise risks are
identified and prioritized by management and each prioritized risk is assigned to a Board committee or the full Board for oversight
as follows:
Full
Board — Risks and exposures associated with strategic, financial and execution risks and other current matters that
may present material risk to our operations, plans, prospects or reputation.
Audit
Committee — Risks and exposures associated with financial matters, particularly financial reporting, tax, accounting,
disclosure, internal control over financial reporting, financial policies, investment guidelines and credit and liquidity matters.
Nominating
and Governance Committee — Risks and exposures relating to corporate governance and management and director succession
planning.
Compensation
Committee — Risks and exposures associated with leadership assessment and compensation programs and arrangements, including
incentive plans.
Board
Leadership Structure
The
Chairman of the Board presides at all meetings of the Board.
Review,
Approval or Ratification of Transactions with Related Persons
The
Nominating and Governance Committee reviews issues involving potential conflicts of interest, other than Related Party transactions,
which are reviewed by the Audit Committee.
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a)
of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of our common
stock, to file with the SEC reports about their ownership of common stock and other equity securities of the Company. Such
directors, officers and 10% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file.
Based
solely on our review of the reports provided to us or on
representations received from our directors and executive officers, we believe that all filing requirements applicable to our
executive officers, directors and other persons who beneficially own more than 10% of a registered class of our equity securities
were complied with in the year ended December 31, 2021, except that:
| (i) | one Form 3 filed by Alexandra
Larson in connection with her appointment as director of the Company was not filed on
a timely basis; |
| (ii) | one Form 3 filed by Dean Baker in connection with his appointment
as director of the Company was not filed on a timely basis; and |
| (iii) | one Form 5 filed by Aaron Mendelsohn
in connection with a gift of securities to an entity owned by his children was not filed
on a timely basis. |
ITEM
13. Certain Relationships and Related Transactions and Director Independence
Related
Party Transactions
In
addition to the compensation arrangements, including employment, termination of employment and change in control arrangements
discussed above in the sections titled “Board of Directors and Corporate Governance – Director Compensation”
and “Executive Compensation,” we describe below transactions and series of similar transactions, since the beginning
of our last fiscal year, to which we were a party or will be a party, in which:
|
● |
the
amounts involved exceeded or will exceed $120,000; and |
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any
of our directors, nominees for director, executive officers or holders of more than 5% of our outstanding capital stock, or
any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have
a direct or indirect material interest. |
Agreement
and Plan of Merger with Nano Precision Medical, Inc.
As disclosed in the Company’s Current
Report on Form 8-K filed with the SEC on February 8, 2022, on February 4, 2022, Second Sight entered into the agreement and plan
of merger (the “Merger Agreement”) with Nano Precision Medical, Inc., a California corporation (“NPM”),
and, upon and subject to the execution of a joinder, NPM Acquisition Corp., a California corporation and a wholly-owned subsidiary
of the Company (“Merger Sub”). Pursuant to the Merger Agreement and subject to the terms and conditions set forth
therein, NPM will merge with and into Merger Sub (the “Merger”), and upon consummation of the Merger, Merger Sub will
cease to exist and NPM will become a wholly-owned subsidiary of the Company. Upon completion of the Merger and subject to shareholder
approval, the Company will change its name as the Company and NPM may agree in the future and change its trading symbol as NPM
requests in writing following consultation with Nasdaq.
Subject to the terms and conditions of
the Merger Agreement, if the Merger is completed, the securities of NPM will be converted into the right to receive an aggregate
of approximately 134,349,464 of shares of the Company’s common stock (the “Merger Shares”) representing approximately
77.32% of the total issued and outstanding shares of common stock of the Company on a fully converted basis, including, without
limitation, giving effect to the conversion of all options, warrants, and any and all other convertible securities.
The Merger will involve change of control
and may be consummated only following the approval of the Company’s shareholders. The Company is obligated to file a Registration
Statement on Form S-4 in connection with the Merger to register the Merger Shares.
SAFE
On February 4, 2022, in connection
with the Merger, Second Sight and NPM also entered into an agreement (“SAFE”) whereby Second Sight would provide to
NPM, pending closing of the Merger, an investment advance of $8 million which, effective upon the termination date of the Merger
Agreement without completion of the Merger, will result in NPM’s issuing to Second Sight that number of shares of NPM common
stock which following that issuance will equal not less than 2.133% of the issued and outstanding shares of NPM common stock assuming
exercise or conversion of all outstanding vested and unvested options, warrants, and convertible securities. In the event NPM
completes an equity financing at a lower valuation, Second Sight may be eligible to receive additional shares of NPM common stock
as set forth in the SAFE. If the Merger is completed, the SAFE will terminate.
Related Parties in Connection with
the Merger and SAFE
Certain of Second Sight’s directors
have interests in the Merger that are different from, or in addition to, the interests of Second Sight’s shareholders generally.
These interests may present them with actual or potential conflicts of interest.
Common Directorship
Three of the Company’s directors, Gregg Williams, Aaron
Mendelsohn, and Dean Baker are also directors of NPM.
Securities Ownership
Three of the Company’s directors,
Gregg Williams, Aaron Mendelsohn, and Dean Baker have investments and financial interests in NPM as follows (on an as converted
basis):
Name
of Director |
Ownership
of NPM Common Stock |
|
|
Gregg
Williams |
31.84% |
Dean
Baker |
0.58% |
Aaron
Mendelsohn |
1.79% |
Family Relationship
Our director, Aaron Mendelsohn is
the father of Adam Mendelsohn. Adam Mendelsohn, who is a co-founder, chief executive officer, director and principal shareholder
of NPM, is expected to become chief executive officer, a director and principal shareholder of Second Sight following the consummation
of the Merger.
Special Committee
As a result of the aforementioned actual or potential conflicts of interests, a special committee of the Board, consisting of members having no affiliation with NPM, was created for
the purpose of evaluating the proposed Merger and determining whether the Merger Agreement and the proposed Merger are in the
best interests of Second Sight and its shareholders. The special committee consists of Will McGuire, Matthew Pfeffer, and Alexandra
Larson.
The
special committee was empowered to investigate the proposed transaction with NPM, negotiate the terms of the proposed transaction
with NPM or elect not to pursue the proposed transaction with NPM and, in the Special Committee’s discretion, explore and
evaluate potential alternative transactions. Following multiple
consultations with financial and legal advisers, the special committee issued its recommendation for the Board to approve the
proposed merger on the terms of the Merger Agreement and the concurrently entered SAFE agreement. Notwithstanding the foregoing,
there can be no assurance that the efforts of the special committee in connection with the proposed merger were sufficient, nor
can there be an assurance that the special committee was aware of and considered all the relevant facts and circumstances surrounding
the proposed merger. The opinion of the special committee was based on then-available information, as of the date of each such
opinion and does not reflect any subsequent events. Therefore, there can be no assurance that the terms of the proposed merger
are fair and in the best interest of Second Sight despite the opinion of the special committee.