CORPORATE GOVERNANCE AND NOMINATING COMMITTEE CHARTER
The Corporate Governance and Nominating Committee is a committee of, and reports to, the Board of Directors of MedicalCV, Inc. through this Charter, the Board delegates certain responsibilities to the Committee to assist the Board in the fulfillment of its duties to the Company and its shareholders.
1. Authority. The Committee shall be given the resources and assistance necessary to discharge its responsibilities, including unrestricted access to Company personnel and documents. The Committee shall also have authority, in consultation with the Chairman of the Board, to engage outside advisors as it deems necessary or appropriate. The Committee shall have sole authority to retain and terminate any search firm to be used to identify Director candidates, including sole authority to approve the search firm’s fees and other retention terms.
2. Composition. The Committee shall consist of at least two or more Directors, who shall be appointed annually, and subject to removal at any time, by the Board of Directors. Each Committee member shall be an “independent director” under the rules of any national securities exchange on which the Company’s common stock is listed (the “Exchange”) and the Company’s nominating guidelines attached as an addendum to this Charter.
3. Procedures. The Committee shall hold at least two regular meetings each year, and such special meetings as may be required. Meetings may be called by the Chair of the Committee or the Chairman of the Board. The presence in person or by telephone of two members shall constitute a quorum. Meetings may be held at any time, any place and in any manner permitted by applicable law and the Company’s Bylaws. Minutes of the Committee’s meetings shall be kept. To the extent practicable, the meeting agenda, draft minutes from the prior meeting and supporting materials shall be provided to Committee members prior to each meeting to allow time for review. The Committee shall have authority to create and delegate specific tasks to such standing or ad hoc subcommittee as it may determine to be necessary or appropriate for the discharge of its responsibilities. The results of the Committee’s meetings shall be reported to the full Board.
4. Responsibilities. The Committee’s responsibilities shall be:
(a) to monitor the implementation and operation of the Company’s corporate governance guidelines and nominating guidelines;
(b) to review from time to time the adequacy of the corporate governance guidelines and nominating guidelines in light of broadly accepted practices of corporate governance, emerging governance issues and market and regulatory expectations, and to advise and make recommendations to the Board with respect to appropriate modifications;
(c) to identify and review measures to strengthen the operation of the corporate governance guidelines and nominating guidelines, and to advise the Board with respect thereto;
(d) to prepare and supervise the implementation of the Board’s annual reviews of (i) director independence; (ii) the Board’s performance, and (iii) the performance of each of the committees of the Board, as contemplated by the Company’s corporate governance guidelines, and to oversee the Board’s processes for evaluation of the management of the Corporation and make recommendations to the Board with respect to such processes;
(e) to identify, review and evaluate candidates for election as Director who meet the standards set forth in the Company’s nominating guidelines, including such inquiries as the Committee deems appropriate into the background and qualifications of candidates and interviews with potential candidates to determine their qualification and interest, and to recommend to the Board of Directors nominees for any election of directors in compliance with the Company’s nominating guidelines (including the policy that a majority of Directors be independent of the Company and of the Company’s management);
(f) to advise the Board with respect to such other matters relating to the governance of the Company as the Committee may from time to time approve, including changes to terms or scope of this Charter and the Committee’s overall responsibilities; and
(g) to carry out such other tasks as the Board may from time to time delegate to the Committee for action consistent with this Charter.
5. Annual Performance Review. The Committee shall conduct an annual evaluation of its performance in carrying out its responsibilities hereunder.
The Board of Directors (the “Board”) of MedicalCV, Inc. (the “Company”), acting on the recommendation of its Corporate Governance and Nominating Committee (the “Committee”), has developed and adopted a set of corporate governance principles (the “Guidelines”) establishing a common set of expectations to assist the Board and its committees in performing their duties in compliance with applicable legal and regulatory requirements.
The Committee shall implement the Company’s policy of having a board of directors at least a majority of whom are independent as that term is defined under be an “independent director” under the rules of any national securities exchange on which the Company’s common stock is listed (the “Exchange”) applicable for the continued listing of the Company’s common shares.
1. The Committee will observe the following procedures in identifying and evaluating candidates for election to the Company’s Board of Directors.
2. The Company is of the view that the continuing service of qualified incumbents promotes stability and continuity in the boardroom, contributing to the Board’s ability to work as a collective body, while giving the Company the benefit of the familiarity and insight into the Company’s affairs that its directors have accumulated during their tenure. Accordingly, the process of the Committee for identifying nominees shall reflect the Company’s practice of re-nominating incumbent directors who continue to satisfy the Committee’s criteria for membership on the Board, whom the Committee believes continue to make important contributions to the Board and who consent to continue their service on the Board.
3. Consistent with this policy, in considering candidates for election at annual meetings of shareholders, the Committee will first determine the incumbent directors who wish to continue their service on the Board.
4. The Committee will evaluate the qualifications and performance of the incumbent directors that desire to continue their service. In particular, as to each such incumbent director, the Committee will-
• consider if the director continues to satisfy the minimum qualifications for director candidates adopted by the Committee;
• review the assessments of the performance of the director during the preceding term made by the Committee;
• determine whether there exist any special, countervailing considerations against re-nomination of the director; and
• consider whether the director meets the requirements for independence under Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the rules of the Exchange.
5. If the Committee determines that-
• an incumbent director consenting to re-nomination continues to be qualified and has satisfactorily performed his or her duties as director during the preceding term;
• there exist no reasons, including considerations relating to the composition and functional needs of the Board as a whole, why in the Committee’s view the incumbent should not be re-nominated; and
• the Committee may, absent special circumstances, propose the incumbent director for re-election.
6. The Committee will identify and evaluate new candidates for election to the Board where there is no qualified and available incumbent, including for the purpose of filing vacancies arising by reason of the resignation, retirement, removal, death or disability of an incumbent director or a decision of the directors to expand the size of the Board.
7. The Committee will solicit recommendations for nominees from persons that the Committee believes are likely to be familiar with qualified candidates. These persons may include members of the Board, including members of the Committee, and management of the Company. The Committee may also determine to engage a professional search firm to assist in identifying qualified candidates; where such a search firm is engaged, the Committee shall set its fees and scope of engagement.
8. As to each recommended candidate that the Committee believes merits consideration, the Committee will-
• cause to be assembled information concerning the background and qualifications of the candidate, including information concerning the candidate required to be disclosed in the Company’s proxy statement under the rules of the SEC and any relationship between the candidate and the person or persons recommending the candidate;
• determine if the candidate satisfies the minimum qualifications required by the Committee of candidates for election as director;
• determine if the candidate possesses any of the specific qualities or skills that under the Committee’s policies must be possessed by one or more members of the Board;
• consider the contribution that the candidate can be expected to make to the overall functioning of the Board; and
• consider the extent to which the membership of the candidate on the Board will promote diversity among the directors.
9. It is appropriate for the Committee, in its discretion, to solicit the views of the Chief Executive Officer, other members of the Company’s senior management and other members of the Board regarding the qualifications and suitability of candidates to be nominated as directors.
10. In its discretion, the Committee may designate one or more of its members (or the entire Committee) to interview any proposed candidate.
11. Based on all available information and relevant considerations, the Committee will recommend to the Board a candidate who, in the view of the Committee, is most suited for membership on the Board.
12. In making its selection, the Committee will evaluate candidates proposed by shareholders under criteria similar to the evaluation of other candidates, except that the Committee may consider, as one of the factors in its evaluation of shareholder recommended nominees, the size and duration of the interest of the recommending shareholder or shareholder group in the equity of the Company.
13. The Committee shall maintain appropriate records regarding its process of identifying and evaluating candidates for election to the Board.
The Committee believes that members of the Company’s Board of Directors must posses certain basic personal and professional qualities in order to properly discharge their fiduciary duties to shareholders, provide effective oversight of the management of the Company and monitor the Company’s adherence to principles of sound corporate governance. It is therefore the policy of the Committee that all persons nominated to serve as a director of the Company should possess the minimum qualifications described in this policy. These are only threshold criteria, however, and the Committee will also consider the contributions that a candidate can be expected to make to the collective functioning of the Board based upon the totality of the candidate’s credentials, experience and expertise, the composition of the board at the time, and other relevant circumstances.
1. Integrity. All candidates must be individuals of personal integrity and ethical character, and who value and appreciate these qualities in others.
2. Absence of Conflicts of Interest. Candidates should not have any interests that would materially impair his or her ability to (i) exercise independent judgment, or (ii) otherwise discharge the fiduciary duties owed as a director to the Company and its shareholders.
3. Fair and Equal Representation. Candidates must be able to represent fairly and equally all shareholders of the Company without favoring or advancing any particular shareholder or other constituency of the Company.
4. Achievement. Candidates must have demonstrated achievement in one or more fields of business, professional, governmental, communal, scientific or educational endeavor.
5. Oversight. Candidates are expected to have sound judgment, borne of management or policy-making experience (which may be as an advisor or consultant), that demonstrates an ability to function effectively in an oversight role.
6. Business Understanding. Candidates must have a general appreciation regarding major issues facing public companies of a size and operational scope similar to the Company. These include -
• contemporary governance concerns;
• regulatory obligations of a public issuer;
• strategic business planning;
• competition in a global economy; and
• basic concepts of corporate finance.
7. Available Time. Candidates must have, and be prepared to devote, adequate time to the Board and its committees. It is expected that each candidate will be available to attend all meetings of the Board and any committees on which the candidate will serve, as well as the Company’s annual meeting of shareholders, after taking into consideration their other business and professional commitments, including service on the boards of other companies.
8. Limited Exceptions. Under exceptional and limited circumstances, the Committee may approve the candidacy of a nominee who does not satisfy all of these requirements if it believes the service of such nominee is in the best interests of the Company and its shareholders.
9. Additional Qualifications. In approving candidates for election as director, the Committee will also assure that-
• at least a majority of the directors serving at any time on the Board are independent, as defined under the rules of the Exchange;
• as many as possible of the directors satisfy the financial literacy requirements required for service on the audit committee under the rules of the Exchange;
• at least one of the directors qualifies as an “audit committee financial expert” under the rules of the SEC;
• at least some of the independent directors have experience as senior executives of a public or substantial private company; and
• at least some of the independent directors have general familiarity with the industry in which the Company conducts a substantial portion of its business or in related industries.
10. Diversity. The Committee will seek to promote through the nominations process an appropriate diversity on the Board of professional background, experience, expertise, perspective, age, gender, ethnicity and country of citizenship.
