Charter of the Nominating and Governance Committee of the Board of Directors

I. Statement of Policy

This Charter specifies the scope of the responsibilities of the Nominating and Corporate Governance Committee (the “Committee”) of the Board of Directors (the “Board”) of Applied Signal Technology, Inc.(the “Company”) and the manner in which those responsibilities shall be performed, including its structure, processes and membership requirements.

The primary responsibilities of the Committee are to ((i) identify individuals qualified to become Board members; (ii) select director nominees for each election of directors; (iii) develop and recommend to the Board criteria for selecting qualified director candidates; (iv) consider committee member qualifications, appointment and removal; (v) recommend corporate governance principles, codes of conduct and compliance mechanisms applicable to the Company, and (vi) provide oversight in the evaluation of the Board and each committee.

II. Organization and Membership Requirements

The Committee shall be comprised of three or more directors, each of whom shall satisfy the independence requirements established by the rules of Nasdaq, provided that one director who does not meet the independence criteria of Nasdaq may serve on the Committee (1) if the individual is an officer who owns or controls more than 20% of the Company voting securities or (2) pursuant to the “exceptional and limited circumstances” exception as provided under the rules of Nasdaq.

The members of the Committee shall be appointed by the Board and shall serve until their successors are duly elected and qualified or their earlier resignation or removal. Any member of the Committee may be removed or replaced by the Board. Unless a chairman is elected by the full Board, the members of the Committee may designate a chairman by majority vote of the full Committee membership. The Committee may, from time to time, delegate duties or responsibilities to subcommittees or to one member of the Committee.

A majority of the members shall represent a quorum of the Committee. Any action taken must be approved by at least a majority of the members of the Committee to represent the valid action of the Committee.

The Committee shall have the authority to obtain advice or assistance from consultants, legal counsel, accounting or other advisors as appropriate to perform its duties hereunder, and to determine the terms, costs and fees for such engagements. Without limitation, the Committee shall have the sole authority to retain or terminate any search firm to be used to identify director candidates and to determine and approve the terms, costs and fees for such engagements. The fees and costs of any consultant or advisor engaged by the Committee to assist the Committee in performing its duties hereunder shall be borne by the Company.

III. Meetings

The Committee shall meet as often as it deems necessary to fulfill its responsibilities hereunder, and may meet with management or individual directors at any time it deems appropriate to discuss any matters before the Committee. The Committee shall maintain written minutes of its meetings.

IV. Committee Authority and Responsibility

To fulfill its responsibilities and duties hereunder, the Committee shall:



Nominating Functions




Evaluate and select director nominees for each election of directors.




Determine criteria for selecting new directors, including desired board skills and attributes, and identify and actively seek individuals qualified to become directors.




Consider any nominations of director candidates validly made by stockholders.




Review and make recommendations to the Board concerning qualifications, appointment and removal of committee members.



Corporate Governance Functions




In consultation with the Audit Committee, adopt and approve a Code of Business Conduct and Ethics applicable to all employees and directors that meets the requirements of The Nasdaq Stock Market, adopt procedures for monitoring and enforcing compliance with the Code of Business Conduct and Ethics, and review the Code from time to time and recommend such changes to the Code as the Committee shall deem appropriate.




Review, at least annually, the Company’s compliance with corporate governance listing requirements established by The Nasdaq Stock Market, and report to the Board regarding the same.




Assist the Board in the orientation of new directors and in the development of corporate governance-related continuing education for all Board members.




Review and reassess the adequacy of this Charter as appropriate and recommend any proposed changes to the Board for approval.




Perform any other activities consistent with this Charter, the Company’s Bylaws and governing law, as the Committee or the Board deems necessary or appropriate.