8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________

FORM 8-K

_____________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 18, 2013 (January 17, 2013)

NTS, INC.

(formerly Xfone, Inc.)

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

Commission File No. 001-32521

11-3618510

(I.R.S. Employer Identification Number)

5307 W. Loop 289

Lubbock, Texas 79414

 (Address of principal executive offices)

806-771-5212

 (Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01 Other Events

On January 17, 2013, the Board of Directors of NTS, Inc. (f/k/a Xfone, Inc., the “Company”) amended and restated the charters of the Audit Committee, the Compensation Committee and the Nominating Committee (which has been renamed the Nominating and Corporate Governance Committee). Copies of the amended and restated charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are attached hereto as Exhibits 99.1 through 99.3, respectively and will be available on the Company’s website at www.ntscom.com.

Item 9.01 Financial Statements and Exhibits.

(d)      Exhibits.

Exhibit No.	Description
99.1	Charter of the Audit Committee of the Board of Directors of NTS, Inc.
99.2	Charter of the Compensation Committee of the Board of Directors of NTS, Inc.
99.3	Charter of the Nominating and Corporate Governance Committee of the Board of Directors of NTS, Inc.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NTS, Inc.
Date:  January 18, 2013	By:	/s/ Guy Nissenson
		Guy Nissenson
		President, Chief Executive Officer and Chairman of the Board of Directors

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EX-99.1

EXHIBIT 99.1

CHARTER OF THE AUDIT COMMITTEE

OF THE BOARD OF DIRECTORS OF

NTS, INC.

I. PURPOSE

The Audit Committee (the “Committee”) will assist the Board of Directors (the “Board”) of NTS, Inc., f/k/a Xfone, Inc. (the “Corporation”) by overseeing the integrity of the Corporation’s financial statements and reporting process, overseeing the independent auditor’s qualifications and independence, and overseeing the performance of the Corporation’s internal audit function and independent auditors. The Board recognizes that the Committee will rely on the advice and information it receives from the Corporation’s management and its internal and outside auditors. The Board does, however, expect the Committee to exercise independent judgment in assessing the quality of the Corporation’s financial reporting process and its internal controls. In doing so, the Board expects that the Committee will maintain free and open communications with the other directors, the Corporation’s independent and internal auditors and the financial management of the Corporation.

II. COMPOSITION

The Committee shall be comprised of three (3) directors, each of whom shall meet the independence requirements of the U.S. Securities and Exchange Commission (“SEC”) and the NYSE MKT LLC (“NYSE MKT”) (or any successor thereto, or the applicable rules and standards of any other exchange or quotation system on which the Corporation’s shares may be listed from time to time). No member of the Committee, other than in his or her capacity as a member of the Board or of a committee of the Board, shall (i) accept any consulting, advisory or other fee from the Corporation or any subsidiary of the Corporation or (ii) be an affiliated person of the Corporation or any subsidiary of the Corporation.

All members of the Committee shall meet the expertise requirements of the SEC and the NYSE MKT, and at least one (1) member of the Committee shall be “financially sophisticated” as defined in Section 803B(2)(a)(iii) of the NYSE MKT Company Guide (or any successor section thereto) and shall qualify as an “audit committee financial expert” as defined in Section 407(d)(5)(ii) of Regulation S-K (or any successor rule thereto).

The members of the Committee shall be elected by the Board. The Board shall appoint a Chairperson.

III. MEETINGS; WRITTEN CONSENT IN LIEU OF A MEETING

The Committee will meet with management and the independent auditors at least four (4) times annually, on a quarterly basis, and be available to meet more frequently as circumstances dictate. In addition to these regularly scheduled meetings, the Committee should meet, at its discretion when it deems it necessary, with management and the independent auditors in separate executive sessions to discuss any matters that the Committee and each of these groups believe should be discussed privately.

Members of the Committee may participate in meetings remotely by means of a telephone conference, Internet broadcast or similar communication device, provided that all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at the meeting.

A majority of all the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of all the members of the Committee participating (including by proxy) at a meeting at which a quorum is present shall be the act of the Committee.

In addition, any action required or permitted to be taken at a meeting of the Committee, may be taken without a meeting if, before or after the action, a written consent thereto is signed by all the members of the Committee.

The Chairman of the Committee shall preside at each meeting. In the event that the Chairman is not present at the meeting, the Committee members present at that meeting shall designate one of its members as the acting chair of such meeting.

IV. COMPENSATION

The members of the Committee shall be compensated for participation at Committee meetings as provided by the Board, and shall be reimbursed for reasonable expenses incurred in connection with their service on the Committee. No additional fees (other than for service as a director) may be paid to members of the Committee.

V. RESPONSIBILITIES, DUTIES AND AUTHORITY

The responsibilities and duties of the Committee shall include the following:

Documents/Reports Review

1) Review with financial management and the independent auditors, prior to filing, the Corporation’s annual financial statements, the annual report on Form 10-K (or any successor form thereto) and other reports, including the Management’s Discussion and Analysis contained in these reports, the year-end earnings release and other financial information and earnings guidance provided to analysts or rating agencies, the public, or in certain circumstances governmental bodies, including any certification, report, opinion or review rendered by the independent auditors.

2) Review with financial management and the independent auditors each quarterly earnings release and quarterly reports on Form 10-Q (or any successor form thereto), including the Management’s Discussion and Analysis contained in these reports, prior to their filing. The Chairperson of the Committee may represent the entire Committee for purposes of this review.

3) Review with independent auditors and senior management the recommendations of the independent auditors included in their management letter, if any, and their informal observations regarding the adequacy of overall financial and accounting procedures of the Corporation. On the basis of this review, make recommendations to senior management for any changes that seem appropriate.

4) Review and discuss with management all Section 302 and 906 certifications and Section 404 internal control reports (including the attestation of the independent auditors) required by the Sarbanes Oxley Act of 2002 (the “S-O Act”).

Independent Auditors

5) Appoint, retain or terminate, and oversee the independent auditors. Although the Committee has the sole authority to appoint the independent auditors, the Committee shall recommend that the Board ask the Corporation’s stockholders at their annual meeting to ratify the Committee’s selection of independent auditors. The Committee shall also approve the compensation of the independent auditors although senior management shall negotiate such compensation.

6) The Committee shall have a clear understanding with the independent auditors that they must maintain an open and transparent relationship with the Committee, that the ultimate accountability of the independent auditors is to the Committee and that the independent auditors must report directly to the Committee. On a periodic basis, at least annually, the Committee will review and discuss with the independent auditors all significant relationships, including non-audit services, proposed or performed, that the auditors have with the Corporation to determine the auditors’ independence. In connection with each such review, the Committee shall request that the independent auditors submit a formal written statement delineating all relationships (including non-audit services performed) between the independent auditors and the Corporation and its officers and directors, describing the independent auditor firm’s internal quality control procedures and the particulars of any material issues raised by reviews of these procedures during the preceding five years.

7) The Committee may, at its discretion, meet with the independent auditors and/or the Corporation's Chief Financial Officer prior to the audit to review the planning and scope of the audit.

8) In addition to approving the engagement of the independent auditors to audit the Corporation’s consolidated financial statements, approve, in accordance with Section 202 of the S-O Act, all use of the Corporation’s independent auditors for non-audit services, other than non-audit services prohibited by Section 10A(g) of the Securities Exchange Act of 1934, as amended. Audit and non-audit services must be approved either (i) explicitly in advance or (ii) pursuant to a pre-approved policy established by the Committee detailed as to the services that may be pre-approved, that does not permit delegation of approval authority to the Corporation’s management, and requires management to inform the Committee of each service approved and performed under the policy. The Committee will also set clear hiring policies for employees or former employees of the independent auditors.

9) Prior to releasing year-end earnings, discuss the results of the audit with the independent auditors. In this regard, the Committee shall obtain, review and discuss with the independent auditors reports and analyses from the independent auditors concerning: (i) all critical accounting policies and practices used by the Corporation, (ii) significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including all alternative treatment of financial information within generally accepted accounting principles (“GAAP”) that have been discussed with management, the ramifications of the use of alternative disclosures and treatments and the treatments preferred by the independent auditors, (iii) significant issues regarding accounting principles and estimates, (iv) off-balance sheet items, (v) related party transactions, and (vi) any other material written communications between the independent auditors and management. In addition, the Committee shall discuss certain matters required to be communicated to the Committee by the independent auditors in accordance with generally accepted accounting standards.

10) Ensure that the lead audit partner assigned by the independent auditors to the Corporation, as well as the reviewing or concurring partner and the other audit engagement team partners be rotated in accordance with Section 203 of the S-O Act.

11) Annually consult with the independent auditors out of the presence of management about internal controls and the fullness and accuracy of the Corporation’s financial statements.

Financial Reporting Process

12) In consultation with the independent auditors, review the integrity of the Corporation’s financial reporting process, both internal and external.

13) Following completion of the annual audit, review separately with management and the independent auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.

14) Review any significant disagreement among management and the independent auditors in connection with the preparation of the financial statements. In cases where any such disagreement cannot be resolved to the mutual satisfaction of management and the independent auditors, the Committee shall have the responsibility for making the final determination of the Corporation’s position after fully discussing such disagreement with management.

15) Establish regular reporting to the Committee by management and the independent auditors regarding any principal/critical risks, emerging or developing issues and significant judgments made or to be made in management’s preparation of the financial statements.

16) Review with the independent auditors and management the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented.

Risk Mitigation

17) Review management’s programs and processes for risk assessment and risk management for protection of the Corporation’s assets and business.

18) Review, with the Corporation’s counsel, legal compliance matters, including any reports of violation of the Code of Conduct and Ethics.

19) Review, with the Corporation’s counsel, any legal matter that could have a significant impact on the Corporation’s financial statements.

Related Party Transactions

20) Review all potential affiliated and related party transactions in accordance with the rules of the NYSE MKT, approve any such transaction prior to the entry thereof, and upon such approval, recommend approval by the Board and review the disclosure relating to such transaction in the Corporation’s public filings.

21) Review, approve and recommend approval by the Board of any material modifications to existing affiliated and related party relationships and review disclosure of such modifications in the Corporation’s public filings.

Other Committee Responsibilities and Authority

22) Establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, and auditing matters and confidential, anonymous submissions by employees of the Corporation of concerns regarding questionable accounting or auditing matters, consistent with the Corporation’s Code of Conduct and Ethics.

23) Annually prepare a report to stockholders as and to the extent required by SEC regulations, to be included in the Corporation’s proxy statement to the extent required by SEC regulations.

24) Annually provide for a review of the Committee’s performance.

25) Assure that minutes of each meeting are prepared and available to all members of the Board and provide the Board with periodic summary reports concerning its activities which shall include recommendations for Board actions when appropriate. The Secretary of the Corporation will maintain the permanent file of the minutes.

26) Review and approve the Corporation’s Code of Conduct and Ethics and any amendments thereto.

27) Review and update this Charter annually, as conditions dictate. Revisions to this Charter shall be submitted to the Board for approval and published as required by SEC regulations.

28) Perform any other activities consistent with this Charter, the Corporation’s Bylaws and government law, as the Committee or the Board deems necessary or appropriate.

29) Perform any other activities consistent with this Charter, the Corporation’s Bylaws and government law, as the Committee or the Board deems necessary or appropriate.

30) Perform any other activities consistent with this Charter, the Corporation’s Bylaws and government law, as the Committee or the Board deems necessary or appropriate.

VI. FUNDING

31) The Corporation shall provide the Committee with appropriate funding, as determined to be reasonable by the Committee (i) to compensate the independent auditors engaged for purposes of rendering an audit report or related work or performing other audit, review or attest services, (ii) to compensate any Corporation approved experts, consultants or advisors engaged by the Committee and (iii) for the ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties. The Committee shall give prompt notice to the Corporation’s Chief Financial Officer of all expenditures by the Committee

VII. AMENDMENTS

32) This Charter was originally adopted by the Board on November 24, 2004, and then amended on January 28, 2008 and on June 28, 2009, modified to reflect the Corporation's name change in February 2012 and amended on January 17, 2013.

EX-99.2

EXHIBIT 99.2

CHARTER OF THE COMPENSATION COMMITTEE

OF THE BOARD OF DIRECTORS OF

NTS, INC.

Purpose

The Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of NTS, Inc., f/k/a Xfone, Inc. (the “Company”) shall assist the Board in the discharge of its responsibilities with respect to the compensation of the directors and executive officers1 of the Company.

Composition of the Compensation Committee

The Committee shall consist of not less than two (2) directors each of whom shall be an independent director under the rules and standards of the NYSE MKT LLC (“NYSE MKT”) (or any successor thereto, or the applicable rules and standards of any other exchange or quotation system on which the Company’s shares may be listed from time to time), a “nonemployee director” within the meaning of Rule 16b-3 issued by the U.S. Securities and Exchange Commission (“SEC”), and an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended.

The receipt of awards of stock or stock options pursuant to the Company's equity incentive plans, or compensation for participation at meetings, by a director as part of his or her compensation for service on the Board and committees of the Board shall not disqualify the director from serving as a member of the Committee.

 

1 For purposes of this Charter - an "executive officer" shall mean the Company's president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company. Officers of the Company's subsidiaries shall be deemed executive officers of the Company if they perform such policy-making functions for the Company. "policy-making function" is not intended to include policy-making functions that are not significant.

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If the Committee is comprised of at least three (3) members, then one (1) director who is not independent under the NYSE MKT rules and standards, and is not a current officer or employee of the Company or any of its subsidiaries (or an immediate family member of such person), may be appointed to the Committee, under exceptional and limited circumstances, as determined by the Board in accordance with applicable NYSE MKT rules and standards.

The Board shall designate one (1) member of the Committee as its Chairman. Members of the Committee shall serve until their resignation, retirement, removal by the Board or until their successors are appointed.

Responsibilities and Duties

In carrying out the purpose and authorities set forth herein, the Committee shall:

1. Executive Officers Compensation.  Review and recommend to the Board the corporate goals and objectives relevant to the compensation of the Company’s Chief Executive Officer (“CEO”) and other executive officers, evaluate the executive officers’ performance in light of those goals and objectives, and recommend to the Board the executive officers’ compensation level based on this evaluation. The CEO may not be present during voting or deliberations on his or her compensation;

2. Significant Executive Officers Contracts.  Review and recommend to the Board employment agreements and significant arrangements or transactions with executive officers, including any arrangements having any compensatory effect or purpose; including approving base salaries, salary increases, bonus targets and other remuneration for the executive officers, as well as any employment terms for the executive officers that are not part of the Company's standard employment terms relating to its employees generally;

3. Director Compensation.  Review and recommend to the Board appropriate director compensation programs for service as directors, committee chairmanships, and committee members, consistent with any applicable requirements of the NYSE MKT rules and standards for independent directors and reasonable in light of the size and business of the Company;

4. Compensation Policies and Performance Review.  Annually assess the Company’s compensation policies applicable to the Company’s executive officers and directors, including the relationship of corporate performance to executive compensation;

5. Retention of Compensation Consultants, Counsels and Other Advisors. Have full authority to hire independent compensation consultants, counsels and other advisors (each an “Advisor”) to assist in the design, formulation, analysis and implementation of compensation programs for the Company’s executive officers. The Committee shall consider any existing or potential conflicts of interest before selecting an Advisor. In doing so the Committee shall take into consideration all factors relevant to the Advisor’s independence from management, including: (i) the provision of other services to the Company by the employer of the Advisor (the “Advisor's Employer”); (ii) the amount of fees received from the Company by the Advisor's Employer as a percentage of total Advisor's Employer revenue; (iii) the Advisor's Employer’s policies and procedures designed to prevent conflicts of interest; (iv) any business or personal relationship of the Advisor with a member of the Committee; (v) any Company's stock owned by the Advisor; and (vi) any business or personal relationship of the Advisor or the Advisor's Employer with an executive officer of the Company. The committee shall not be required to undertake the foregoing review in connection with obtaining the advice of in-house legal counsel;

6. Review. Annually review the operation of all of the Company’s employee benefit plans, except that the day-to-day administration of such plans, including the preparation and filing of all government reports and the preparation and delivery of all required employee materials and communications, shall be performed by the Company's management;

7. Access to Executives.  Have full access to the Company’s executives as necessary to carry out its responsibilities;

8. Other Activities.  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; and

9. Review Charter.  Review this Charter annually for adequacy and recommend any changes to the Board.

Committee Meetings

The Committee shall meet with the CEO at or near the start of each fiscal year to discuss the goals and incentive compensation programs to be in effect for such fiscal year and the performance targets triggering payout under those programs. 

The Committee shall, by duly authorized resolution, recommend to the Board the incentive compensation programs to be in effect for the upcoming or current fiscal year (depending on when the Committee meeting is held) for the Company’s executive officers and other participants, including the objectives to be attained and the procedures for determining the individual awards payable under those programs. 

At or near the end of each fiscal year, the Committee shall meet to review performance under those programs and recommend to the Board the award of bonuses thereunder. At that time the Committee shall also recommend to the Board whether to adjust base salary levels in effect for the Company’s executive officers and shall review the overall performance of the Company’s employee benefit plans.

The Committee shall also meet as and when necessary to act upon any other matters within its jurisdiction under this Charter. 

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Members of the Committee may participate in meetings remotely by means of a telephone conference, Internet broadcast or similar communication device, provided that all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at the meeting.

A majority of all the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of all the members of the Committee participating (including by proxy) at a meeting at which a quorum is present shall be the act of the Committee.

In addition, any action required or permitted to be taken at a meeting of the Committee, may be taken without a meeting if, before or after the action, a written consent thereto is signed by all the members of the Committee.

The Chairman of the Committee shall preside at each meeting. In the event that the Chairman is not present at the meeting, the Committee members present at that meeting shall designate one of its members as the acting chair of such meeting.

Reporting

The Secretary of the Company shall keep minutes of the Committee’s proceedings. The minutes of a meeting shall be available for review by the entire Board, and shall be filed as permanent records with the Secretary of the Company.

At each meeting of the Board that follows a meeting of the Committee, the Chairman of the Committee shall report to the entire Board on the matters considered at the last meeting(s) of the Committee.

The Committee shall prepare and, through its Chairman, submit annually reports of the Committee’s work and findings to the Board; the Committee shall include recommendations for Board actions when appropriate.

Amendments

Amendments to this Charter shall be made by the Board. This Charter was originally adopted by the Board on December 30, 2007, modified to reflect the Company's name change in February 2012, and then amended on January 17, 2013.

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EX-99.3

EXHIBIT 99.3

CHARTER OF THE NOMINATING AND

CORPORATE GOVERNANCE COMMITTEE

OF THE BOARD OF DIRECTORS OF

NTS, INC.

Purpose

The Nominating and Corporate Governance Committee (the “Committee”) of the Board of Directors (the “Board”) of NTS, Inc., f/k/a Xfone, Inc. (the “Company”) is appointed by the Board to (i) assist the Board by identifying individuals qualified to become Board members, (ii) recommend to the Board the director nominees for the Company's annual meetings of shareholders and the candidates to fill vacancies in the Board, (iii) recommend to the Board director nominees for each Board committee; (iv) recommend corporate governance principles, codes of conduct and ethics and compliance mechanisms applicable to the Company; and (v) provide oversight in the evaluation of the Board and each Board committee.

Committee Membership

The members of the Committee shall be elected by the Board.

The Committee shall be comprised of at least two (2) voting members satisfying the independence requirements of the U.S. Securities and Exchange Commission (the “SEC”) and the NYSE MKT LLC (“NYSE MKT”) (or any successor thereto, or the applicable rules of any other exchange or quotation system on which the Company’s shares may be listed from time to time).

If the Committee is comprised of at least three (3) members, then one (1) director who is not independent under the NYSE MKT rules and standards, and is not a current officer or employee of the Company or any of its subsidiaries (or an immediate family member of such person), may be appointed to the Committee, as a voting member, under exceptional and limited circumstances, as determined by the Board in accordance with applicable NYSE MKT rules and standards.

The Company’s Chief Executive Officer (“CEO”) shall serve as a non-voting advisory member of the Committee.

The voting members of the Committee shall have the option of requesting that the CEO leave a meeting of the Committee at any time when the Committee is discussing any aspect of the nominating process. If requested to do so, the CEO shall be required to leave the meeting for such discussion.

The Board shall designate one (1) voting member of the Committee as its Chairman.

Members of the Committee shall serve until their resignation, retirement, removal by the Board or until their successors are appointed.

Meetings

The Committee shall meet at least once a year with authority to convene additional meetings as circumstances require. In the event that circumstances require the Committee to meet, the Committee shall make itself available and shall hold a meeting within two (2) business days of a request by the Board or management.

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Members of the Committee may participate in meetings remotely by means of a telephone conference, Internet broadcast or similar communication device, provided that all persons participating in the meet­ing can hear each other at the same time. Such participation shall constitute presence in person at the meeting. A majority of the voting members of the Committee shall constitute a quorum for the transaction of business and the vote of a majority of the voting members of the Committee participating (including by proxy) at a meeting at which a quorum is present, shall be the act of the Committee.

In addition, any action required or permitted to be taken at a meeting of the Committee, may be taken without a meeting if, before or after the action, a written consent thereto is signed by all the voting members of the Committee.

The Chairman of the Committee shall preside at each meeting. In the event that the Chairman is not present at the meeting, the Committee members present at that meeting shall designate one (1) of its voting members as the acting chair of such meeting.

Reporting

The Secretary of the Company shall keep minutes of the Committee’s proceedings. The minutes of a meeting shall be available for review by the entire Board and shall be filed as permanent records with the Secretary of the Company.

At each meeting of the Board that follows a meeting of the Committee, the Chairman of the Committee shall report to the entire Board on the matters considered at the last meeting(s) of the Committee.

The Committee shall prepare and, through its Chairman, submit annually reports of the Committee’s work and findings to the Board; the Committee shall include recommendations for Board actions when appropriate.

Committee Authority and Responsibilities

1. The Committee shall have the authority to retain and terminate any search firm to be used to identify director candidates and shall have authority to approve the search firm’s fees and other retention terms. The Committee shall also have authority to seek advice and assistance from internal or external legal, accounting or other advisors and consultants.  The Committee may request any officer or employee of the Company or any outside counsel or consultants to meet with any members of the Committee.

2. The Committee shall actively seek individuals qualified to become Board members for recommendation to the Board.

3. The Committee shall recommend to the Board the director nominees for election and/or re-election at annual meetings of stockholders and candidates to fill vacancies in the Board that occur between annual meetings of stockholders. In carrying out this responsibility, the Committee shall:

(a) Establish qualifications, desired background, and selection criteria for members of the Board in accordance with applicable law and NYSE MKT rules and standards;

(b) Consider candidate recommendations submitted to the Company by any relevant source, as determined by the Committee, including recommendations submitted by the Company's shareholders in accordance with the Company’s Policy Regarding Shareholder Recommendations and Nominations for Director Candidates (the “Policy”), which shall be considered by the Committee in the same manner as candidates recommended to the Committee from other relevant sources; and

(c) Prior to recommending a nominee for election, determine that the election of the nominee as a director would effectively further the Company’s governance policies.

4. The Committee shall review director candidates nominated by stockholders pursuant to the Policy and Article 2.4 of the Company's Bylaws (“Article 2.4”), solely to determine such nomination’s compliance with the provisions of Article 2.4 and/or compliance with Regulation 14A under the Securities Exchange Act of 1934, as amended;

5. The Committee shall evaluate from time to time and make recommendations to the entire Board concerning the number and accountability of Board committees, and the composition of the various committees. The Committee shall consider the desired qualifications for membership on each Board committee, the availability of the director to meet the time commitment required for membership on the particular committee and the extent to which there should be a policy of periodic rotation of committee members.

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6. The Committee shall review from time to time any succession planning recommendations for the Company’s senior executive officers, including but not limited to the CEO, and will do so in concert with the Compensation Committee of the Company. The CEO may not be present during succession planning discussions concerning the CEO.

7. The Committee shall develop, recommend for Board approval, and review on an ongoing basis the adequacy of, the corporate governance principles applicable to the Company.  Such principles may include director qualification standards, director responsibilities, committee responsibilities, director access to management and independent advisors, director compensation, director orientation and continuing education, management succession and annual performance evaluation of the Board and its committees.

8. The Committee shall assist the Board in developing criteria for the evaluation of Board and committee performance. If requested by the Board, the Committee shall assist the Board in its evaluation of the performance of the Board and each Board committee. The Committee shall make reports to the Board regarding the foregoing as appropriate. The Committee shall annually review its own performance.

9. The Committee shall oversee the Company's compliance with legal and regulatory requirements. In doing so, the Committee shall, among others, review, at least annually, the Company’s compliance with the NYSE MKT governance requirements, and report to the Board regarding the same.

10. The Committee shall, in concert with the Audit Committee of the Company, maintain a publicly available Code of Conduct and Ethics applicable to all directors, officers and employees, which meets the requirements of Item 406 of the SEC’s Regulation S-K, and provide for and promptly review disclosure to the public of any change in, or waiver of, such Code of Conduct and Ethics.

11. The Committee shall annually review and reassess the adequacy of this Charter and recommend any proposed changes to the Board for approval.

12.  The Committee shall 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.

Guidelines for Selection of Director Nominees for the Board of Directors

To discharge its duties in identifying and evaluating directors for election to the Board and its committees, the Committee shall evaluate the overall composition of the Board as well as the qualifications of each candidate. In its evaluation process, the Committee shall take into account the following guidelines:

1. Decisions for nominating candidates shall be based on merit, qualifications, performance, competency, and the Company’s business needs and shall comply with the Company’s anti-discrimination policies and federal, state and local laws.

2. A majority of the entire Board shall be composed of independent directors, as defined by the SEC and the NYSE MKT.

3. The composition of the entire Board shall be taken into account when evaluating individual directors, including: the diversity of experience and background represented on the Board; the need for financial, business, academic, public and other expertise on the Board and its committees; and the desire for directors working cooperatively to represent the best interests of the Company, its stockholders and employees.

4. Candidates shall be individuals of the highest professional and personal ethics and values and who possess significant experience or skills that will benefit the Company and assist in discharging their duties as directors.

5. Candidates shall be free of conflicts of interest that would interfere with their ability to discharge their duties as a director or would violate any applicable law or regulation.

6. Candidates shall be willing and able to devote sufficient time to effectively carry out their duties; their service on other boards of public companies should be limited to a reasonable number.

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7. Candidates shall have the desire to represent and evaluate the interests of the Company as a whole.

8. In conducting this assessment, the Committee shall consider diversity, age, skill, and such other factors as it deems appropriate given the current needs of the Board and the Company, to maintain a balance of knowledge, experience, and capability.

9. Any other criteria as determined by the Committee.

Amendments

Amendments to this Charter shall be made by the Board.

This Charter was originally adopted by the Board on December 30, 2007, amended on January 15, 2009, modified to reflect the Company's name change in February 2012, and then amended January 17, 2013.

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