CORPORATE GOVERNANCE

The Board of Directors, which is elected by the stockholders, is the ultimate decision-making body of the Company except with respect to those matters reserved to the stockholders. It selects the senior management team, which is charged with the conduct of the Company’s business. Having selected the senior management team, the Board acts as an advisor and counselor to senior management and ultimately monitors its performance.
In accordance with the NYSE MKT corporate governance listing standards, it is the policy of the Company that the Board of Directors consist of a majority of independent directors. The Board of Directors reviews the relationships that each director has with the Company and other parties. Only those directors who do not have any of the categorical relationships that preclude them from being independent within the independence requirements of the NYSE MKT corporate governance listing standards and who the Board of Directors affirmatively determines have no relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, are considered to be independent directors.
The Board of Directors has a standing Audit Committee, Compensation Committee and Nominating Committee. Each of these Committees is comprised of independent directors.

The Audit Committee has oversight responsibility for quality and integrity of the Company’s consolidated financial statements. The Audit Committee meets privately with members of our independent registered public accounting firm, has the sole authority to retain and dismiss the independent registered public accounting firm and reviews their performance and independence from management. The independent registered public accounting firm has unrestricted access and reports directly to the Audit Committee.

The Compensation Committee is responsible for reviewing and approving all compensation arrangements for the Company’s senior management team, and is also responsible for administering the Company’s stock option plans.

The Nominating Committee is responsible for evaluating and recommending individuals to be nominated for election or re-election to the Board of Directors and its Committees.

In an uncontested election for directors, any nominee for director who receives more votes “withheld” from his or her election than votes “for” such election is required to promptly submit his or her resignation to the Nominating Committee.

The Nominating Committee is required to make recommendations to the Board of Directors as to the action to be taken with respect to any such resignation. The Board of Directors is required to take action within a reasonable period of time and to promptly disclose to the public each resignation and related Board decision.

Amended and Restated Bylaws

ARTICLE I

SHAREHOLDERS

1.1 Meetings.

1.1.1 Place. Meetings of the shareholders shall be held at such place as may be designated by the board of directors.

1.1.2 Annual Meeting. Unless otherwise fixed by the board of directors, an annual meeting of the shareholders, for the election of directors and for other business as may properly be brought before the meeting, shall be held at 10:00 a.m. local time on the 4th Thursday of April in each year or, if that day is a legal holiday, on the next following business day.

1.1.3 Special Meetings. Special meetings of the shareholders may be called at any time by the president, the board of directors or the holders of at least one-fifth of the outstanding shares of stock of the corporation entitled to vote at the meeting.

1.1.4 Notice. Written notice of the time and place of all meetings of shareholders and of the general nature of the business to be transacted at each special meeting of shareholders shall be given to each shareholder entitled to vote at the meeting at least ten (10) days before the date of the meeting unless a greater period of notice is required by law in a particular case.

1.1.5 Quorum. The presence in person or by proxy of the holders of a majority of the outstanding shares of stock of the corporation entitled to vote on a particular matter shall constitute a quorum for the purpose of considering such matter. If a quorum is not present no business shall be transacted except to adjourn to a future time.

1.1.6 Adjourned Meetings. Those shareholders entitled to vote who attend a meeting called for the election of directors that has been previously adjourned for lack of a quorum, although less than a quorum as fixed in these bylaws, shall nevertheless constitute a quorum for the purposes of electing directors. Those shareholders entitled to vote who attend a meeting of shareholders that has been previously adjourned for one or more periods aggregating at least fifteen (15) days because of an absence of a quorum, although then less than a quorum as fixed in these by-laws, shall nevertheless constitute a quorum for the purpose of acting upon any matter set forth in the notice of the meeting if the notice states that those shareholders who attend the adjourned meeting shall nevertheless constitute a quorum for purpose of acting upon the matter.

1.1.7 Participation. One or more shareholders may participate in a shareholders’ meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other.

1.1.8 Voting Rights. Except as otherwise provided herein, the articles of incorporation or by¬laws, every shareholder shall have the right at every shareholders’ meeting to one vote for every share standing in his name on the books of the corporation which is entitled to vote at such meeting. Every shareholder may vote either in person or by proxy.

1.2 Advance Notice Provisions for Business and Nominations at Meetings.

1.2.1 At an annual meeting of shareholders, only such business shall be conducted as has been properly brought before the meeting in accordance with this Section 1.2. To be properly brought before the annual meeting, business and nominations must be: (a) specified in the notice of meeting (or in any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the annual meeting by any shareholder of the corporation who (i) is a shareholder of record on both (A) the date of the giving of the notice provided for in this Section 1.2 and (B) the record date for the determination of shareholders entitled to vote at such annual meeting, and (ii) complies with the notice procedures set forth in this Section 1.2.

1.2.2 In addition to any other applicable requirements, for nominations or other business to be properly brought before an annual meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the secretary of the corporation and such other business must be a proper subject of shareholder action.

(a) To be timely, a written notice of the intent of a shareholder to make a nomination of a person for election as a director or to bring any other matter before the annual meeting shall be received at the principal executive offices of the corporation not earlier than the close of business on the 180th day and not later than the close of business on the 120th day prior to the first anniversary of the date on which the corporation first mailed its proxy materials for the preceding year’s annual meeting of shareholders. However, if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary date of the previous year’s annual meeting, notice by the shareholder must be so received by the secretary not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 75th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is first made by the corporation.

(b) To be in proper written form every such notice by a shareholder shall set forth as to each nominee or matter such shareholder proposes to bring before the annual meeting:

(i) as to each person whom the shareholder proposes to nominate for election or reelection as a director (each, a “proposed nominee”): (A) the name, age, business address and residence address of the proposed nominee; (B) the principal occupation or employment of the proposed nominee; (C) the class or series and number of shares of capital stock of the corporation, if any, which are owned beneficially and of record by the proposed nominee; (D) any other information regarding each proposed nominee proposed by such shareholder as would be required to be included in solicitations of proxies for elections of directors in an election contest (even if an election contest is not involved), or is otherwise required pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, (including such person’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and (E) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder;

(ii) as to any other business that the shareholder proposes to bring before the annual meeting: (A) a description of the matter, including the text of the proposal of business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws of the corporation, the language of the proposed amendment); (B) the reasons for conducting such business at the annual meeting; and (C) any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and

(iii) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal of other business is made: (A) the name and address of such shareholder, as they appear on the corporation’s stock transfer books, and the name and address of such beneficial owner; (B) the class or series and number of shares of capital stock of the corporation which are owned beneficially and of record by such shareholder and such beneficial owner as of the date of the notice; and (C) a representation that such shareholder intends to vote such stock at such meeting, and that such shareholder intends to appear in person or by proxy at the meeting to make the nomination or propose the business specified in the notice.

1.2.3 If a shareholder is entitled to vote only for a specific class or category of directors at a meeting of the shareholders, such shareholder’s right to nominate one or more persons for election as a director at the meeting shall be limited to such class or category of directors.

1.2.4 In the event of a special meeting of shareholders at which directors are to be elected, any shareholder entitled to vote may nominate a person or persons for election as director if such shareholder qualifies under Section 1.2.1 and such shareholder’s written notice is prepared in accordance with Section 1.2.2(b) and is received by the secretary not later than the close of business on the 10th day following the day on which public announcement of the special meeting is first made by the corporation.

1.2.5 At a meeting of shareholders, the chairman of the board shall declare out of order and disregard any nomination or other proposal not made in compliance with the foregoing procedures.

1.2.6 In no event shall the adjournment or postponement of an annual or special meeting of the shareholders, or any announcement thereof, commence a new period for the giving of notice under this Section 1.2.

1.2.7 Notwithstanding the foregoing provisions of this Section 1.2, unless otherwise required by law, if the shareholder of record (or a qualified representative of such shareholder) does not appear at the annual or special meeting to present a nomination or other matter of business, such nomination or business shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the corporation.

1.2.8 As used in these bylaws, the terms “owned beneficially” and “beneficial owner” means all shares which such person is deemed to beneficially own pursuant to Rules 13d-3 and 13d-5 promulgated under the Exchange Act. For purposes of these bylaws, a matter shall be deemed to have been “publicly announced” if such matter is disclosed in a press release reported by the Dow Jones News Service, the Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission.

1.2.9 Notwithstanding the foregoing provisions of this Section 1.2, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.2. Nothing in this Section 1.2 shall be deemed to affect any rights of shareholders to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act nor grant any shareholders a right to have any nominee included in the corporation’s proxy statement.

ARTICLE II

DIRECTORS

2.1 Number and Term. Subject to the provisions of applicable law, the board of directors shall have authority to (a) determine the number of directors to constitute the board, and (b) fix the terms of office of the directors and classify the directors with respect to the time for which they shall severally hold office. Except as otherwise fixed by the board of directors under the authority given above, the number of directors shall be five (5) and each director elected to the board shall hold office until the next annual meeting of the shareholders unless he sooner resigns or is removed or disqualified.

2.2 Powers. All corporate powers shall be exercised by or under authority of, and the business and affairs of the corporation shall be managed under the direction of, the board of directors.

2.3 Meetings.

2.3.1 Place. Meetings of the board of directors shall be held at such place as may be designated by the board or in the notice of the meeting.

2.3.2 Regular Meetings. Regular meetings of the board of directors shall be held at such times as the board may designate. Notice of regular meetings need not be given.

2.3.3 Special Meetings. Special meetings of the board of directors may be called at any time by the president and shall be called by him on the written request of one-third of the directors. Notice (which need not be written) of the time and place of each special meeting shall be given to each director at least two days before the meeting.

2.3.4 Quorum. A majority of all the directors in office shall constitute a quorum for the transaction of business at any meeting and except as otherwise provided herein the acts of a majority of the directors present at any meeting at which a quorum is present shall be the acts of the board of directors.

2.3.5 Participation. One or more directors may participate in a meeting of the board or a committee of the board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other.

2.4 Vacancies. Vacancies in the board of directors shall be filled by vote of a majority of the remaining members of the board.

2.5 Committees. The board of directors may by resolution adopted by a majority of the whole board designate one or more committees, each committee to consist of two or more directors and such alternate members (also directors) as may be designated by the board. To the extent provided in such resolution, any such committee shall have and exercise the powers of the board of directors. Unless otherwise determined by the board, in the absence or disqualification of any member of a committee the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another director to act at the meeting in the place of any such absent or disqualified member.

2.6 Limitation on Directors’ Liability. Except as otherwise provided by law, a director shall not be personally liable for monetary damages as such for any action taken, or failure to take any action, unless:

2.6.1 The director has breached or failed to perform the duties of his office as provided in the Nevada General Corporation Law (the “NGCL”); and

2.6.2 The breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.

ARTICLE III

OFFICERS

3.1 Election. The board of directors shall elect a president, treasurer, secretary and such other officers as it deems advisable. Any number of offices may be held by the same person.

3.2 Authority, Duties and Compensation. The officers shall have such authority and perform such duties and serve for such compensation as may be determined by or under the direction of the board of directors. Except as otherwise provided by the board (a) the president shall be the chief executive officer of the corporation, shall have general supervision over the business and operations of the corporation, may perform any act and execute any instrument for the conduct of such business and operations and shall preside at all meetings of the board and shareholders, (b) the other officers shall have the duties usually related to their offices, and (c) the vice president (or vice presidents in the order determined by the board) shall in the absence of the president have the authority and perform the duties of the president.

ARTICLE IV

INDEMNIFICATION

4.1 Right to Indemnification.

4.1.1 Third Party Claims. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a representative of the corporation, or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise (including employee benefit plans), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interest of the corporation and, with respect to any criminal proceedings, had no reasonable cause to believe his conduct was unlawful. The termination of any action or proceeding by judgment, order, settlement or conviction upon a plea nolo contendere or its equivalent shall not of itself create a presumption that the person did not act in good faith and in a manner that he reasonably believed to be in, or not opposed to, the best interest of the corporation and, with respect to any criminal proceeding, had reasonable cause to believe that his conduct was unlawful.

4.1.2 Derivative Actions. The corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action by or in the right of the corporation to procure judgment in its favor by reason of the fact that he is or was a representative of the corporation or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of the action if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interest of the corporation; provided that no indemnification shall be made under this section in respect of any claim, issue or matter as to which the person has been adjudged to be liable to the corporation unless and only to extent that a court of competent jurisdiction determines that, despite the adjudication of liability but in view of the circumstances of the case, the person is fairly and reasonably entitled to indemnity for the expenses that such court deems proper.

4.2 Procedure for Effecting Indemnification. Unless ordered by a court, any indemnification made under Sections 4.1.1 or 4.1.2 shall be made by the corporation only as authorized in this specific case upon a determination that indemnification of the representative is proper in the circumstances because he has met the applicable standard of conduct set forth in those sections. Such determination shall be made:

4.2.1 By the Board of Directors by a majority vote of a quorum consisting of directors who are not parties to the action or proceeding;

4.2.2 If such a quorum is not obtainable or if obtainable and a majority vote of a quorum of disinterested directors so directs, by independent legal counsel in a written opinion;

4.2.3 By the shareholders; or

4.2.4 In such other manner, if any, as shall be permitted by NGCL.

4.3 Advancement of Expenses. Expenses (including attorneys’ fees) incurred in defending any action or proceeding referred to in this Article may be made by the corporation in advance of the final disposition of the action or proceeding upon receipt of an undertaking by or on behalf of the representative to repay the amount if it is ultimately determined that he is not entitled to be indemnified by the corporation as authorized in this Article or otherwise.

ARTICLE V

SHARES

5.1 Share Certificates. Every shareholder of record shall be entitled to a share certificate representing the shares held by him. Every share certificate shall bear the corporate seal (which may be a facsimile) and the signature of the president or a vice president and the secretary or an assistant secretary.

5.2 Transfers. Transfers of share certificates and the shares represented thereby shall be made on the books of the corporation only by the registered holder or by duly authorized attorney. Transfer shall be made only on surrender of the share certificate or certificates.

ARTICLE VI

AMENDMENTS
Except as otherwise provided by applicable law, these By-Laws may be amended at any regular or special meeting of the board of directors by the vote of a majority of all the directors in office or at any annual or special meeting of shareholders by the vote of the holders of a majority of the outstanding stock entitled to vote. Notice of any such meeting of shareholders shall set forth the proposed change or a summary thereof.

AMENDMENT TO AMENDED AND RESTATED BYLAWS

OF RELM WIRELESS CORPORATION, a Nevada corporation

Effective December 9, 2015, the Amended and Restated Bylaws of RELM WIRELESS CORPORATION, a Nevada corporation (the “Bylaws”), are hereby amended as follows:

A new Article VII is added to the Bylaws to read in its entirety as follows:

ARTICLE VII

NEVADA ACQUISITION OF CONTROLLING INTEREST ACT

Pursuant to NRS § 78.378, the Corporation shall not be subject to the provisions of Nevada Revised Statutes Sections 78.378 to 78.3793, inclusive (Acquisition of Controlling Interest), and specifically that the provisions of NRS §§ 78.378 to 78.3793 do not apply to the Corporation or to an acquisition of a controlling interest by existing or future stockholders.

All other provisions of the Bylaws remain the same.

CERTIFICATION

I hereby certify that I am the duly appointed and acting Secretary of RELM WIRELESS CORPORATION and that the foregoing amendment to the Bylaws of RELM WIRELESS CORPORATION was duly adopted and approved by the Board of Directors at a meeting held on the date set forth above.

 

Dated this 9th day of December, 2015.

 

/s/ William P. Kelly

Executive Vice President, Chief Financial Officer and Secretary

 

 

 

(Updated as of February 24, 2016)

Purpose of the Committee

The Nominating and Governance Committee (the “Committee”) shall report to and assist the Board of Directors (the “Board”) of RELM Wireless Corporation (the “Company”). The purpose of the Committee shall be to determine and recommend to the Board the slate of director nominees for election to the Board at each annual shareholders’ meeting, to identify and recommend candidates to fill vacancies occurring between annual shareholders’ meetings, to review, evaluate and recommend changes to the Company’s corporate governance guidelines and policies, and to monitor the Company’s compliance with such guidelines and policies.

Membership on the Committee

  1. The Committee shall be comprised of not less than three members of the Board.
  2. All members of the Committee shall be independent directors, as independence is defined in accordance with the rules, regulations and standards of the NYSE MKT or any other national securities exchange or any inter-dealer quotation system on which the Company’s common stock is then listed.
  3. Members of the Committee, including the chairperson, shall be appointed and may be removed by the Board at any time with or without cause.

Duties and Responsibilities of the Committee

  1. Policies and Procedures for Nomination of Directors: The Committee shall establish policies and procedures for the nomination of director candidates to the Board. In particular, the Committee shall establish a policy regarding minimum qualifications of director candidates and all procedures for identifying and evaluating candidates for nomination as directors, including candidates recommended by the Company’s security holders. The Committee shall also establish a policy regarding the consideration of director candidates recommended by security holders and procedures to be followed by security holders in submitting such recommendations.
  2. Nomination of Directors: The Committee shall annually consider the size, composition and needs of the Board and consider and recommend director candidates (including those recommended by the Company’s security holders) for membership on the Board. The Committee shall recommend to the Board each year the director nominees for election at the next annual meeting of shareholders. As the need arises to fill vacancies, the Committee shall actively seek individuals qualified to become directors for recommendation to the Board.
  3. Committees of the Board: The Committee shall review annually the purpose of the committees of the Board, recommend to the Board any changes deemed necessary or desirable to the purpose of the committees and whether any committees should be created or discontinued, and recommend to the Board the directors and chairperson to be appointed to each committee. The Committee shall review annually the adequacy of the charters adopted by each committee of the Board, and recommend changes as necessary.
  4. Corporate Governance Guidelines and Compliance: The Committee shall review and assess the adequacy of the Company’s guidelines and policies on corporate governance, including the Company’s codes of conduct and ethics, and recommend to the Board any changes deemed necessary or desirable. The Committee shall also monitor the Company’s compliance with such guidelines and policies.
  5. Conflicts of Interest and Related Party Transactions: The Committee shall consider questions and possible conflicts of interest of directors as such questions arise and shall administer the Company’s policies and procedures regarding the review, approval or ratification of transactions with related persons (it being understood that if the Board creates a special committee in connection with such a transaction or holds a meeting of the non-interested directors of the Board to approve such transaction, the Committee shall not be required to consider such transaction or assess conflicts of interest in connection with such transaction).
  6. Evaluation: The Committee shall conduct an annual review of the performance of the Board, itself, and the Board’s other committees and report the results to the Board.
  7. Reports to the Board: The Committee shall report regularly to the Board on its meetings and activities and review with the Board significant issues and concerns that arise at its meetings or in connection with its activities.
  8. Charter Review: On an annual basis, the Committee shall review the adequacy of this Charter, and recommend to the Board any modifications or changes hereto for approval by the Board.
  9. Other Duties: The Committee shall perform other duties and responsibilities expressly delegated to the Committee by the Board from time to time.

Meetings of the Committee

The Committee shall meet at least once each year. The Committee shall meet periodically in executive session without Company management present. Additional meetings may occur as the Committee or its chairperson deems advisable.  The Committee will cause to be kept adequate minutes of its proceedings.  The Committee shall be governed by the same rules regarding meetings (including meetings by telephone conference or similar communications equipment), action without a meeting, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.  The Committee is authorized, but not obligated, to adopt its own rules of procedure not inconsistent with (a) any provision of this Charter, (b) any provision of the Bylaws of the Company, or (c) the laws of the state of Nevada.

Additional Authority of the Committee

  1. The Committee shall have the authority to delegate any of its responsibilities to subcommittees as the Committee may deem appropriate in its discretion.
  2. The Committee shall have authority to retain any search firm to assist in identifying director candidates, and to retain outside counsel and other advisors as the Committee may deem appropriate in its discretion in the conduct of its duties and responsibilities under this Charter. For the avoidance of doubt, the Committee shall have the sole authority to retain, terminate and negotiate the terms and conditions of the retention of any such advisor. The Company shall provide for appropriate funding as determined by the Committee for payment of compensation to any search firm or any other advisors retained by the Committee.

Last Revised as of February 24, 2016

Last Revised as of February 24, 2016

RELM WIRELESS CORPORATION

COMPENSATION COMMITTEE CHARTER

Purpose

The purpose of the Compensation Committee (the “Committee”) of the Board of Directors of RELM Wireless Corporation (the “Company”) shall be as follows:

  1. To discharge the responsibilities of the Board of Directors relating to the Company’s compensation programs and compensation of the Company’s executives; and
  1. To produce an annual report on executive compensation for inclusion in the Company’s annual proxy statement in accordance with applicable rules and regulations of the NYSE MKT (or any other national securities exchange on which the Company’s common stock is then principally listed and traded), Securities and Exchange Commission (the “SEC”), and other regulatory bodies, if so required.

Composition

The Committee shall consist of two or more members of the Board of Directors, each of whom is determined by the Board of Directors to be (a) “independent” under the rules of the NYSE MKT (or any other national securities exchange on which the Company’s common stock is then principally listed and traded), as applicable to the Company, and the Sarbanes-Oxley Act, (b) a “non-employee director,” as defined in Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934, as amended, and (c) an “outside director” under Section 162(m) of the Internal Revenue Code of 1986, as amended. Notwithstanding the foregoing, the Committee may consist of less than all “independent” members for such periods and to the extent permitted by the rules of the NYSE MKT (or any other national securities exchange on which the Company’s common stock is then principally listed and traded).

Appointment and Removal

The members of the Committee shall be appointed by the Board of Directors and shall serve until such member’s successor is duly elected and qualified or until such member’s earlier resignation or removal. The members of the Committee may be removed by the Board of Directors, with and without cause, at any time.

Chairman

A Chairman shall be elected by the full Board of Directors and approved by a majority of the independent directors. The Chairman will chair all regular sessions of the Committee and set the agendas for Committee meetings.

Meetings

The Committee shall meet as frequently as circumstances dictate. The Chairman of the Board or any member of the Committee may call meetings of the Committee. As part of its review and establishment of the performance criteria and compensation of designated key executives, the Committee should meet separately at least on an annual basis with the Chief Executive Officer of the Company and any other corporate officers as it deems appropriate. However, the Committee should also meet from time to time without such officers present, and in all cases, such officers shall not be present at meetings at which their performance and compensation are being discussed and determined. All meetings of the Committee may be held telephonically.

All independent directors who are not members of the Committee may attend meetings of the Committee, but may not vote. In addition, the Committee may invite to its meetings any director, member of management of the Company, and such other persons as it deems appropriate in order to carry out its responsibilities. The Committee may also exclude from its meetings any persons it deems appropriate in order to carry out its responsibilities. The Committee will cause to be kept adequate minutes of its proceedings. The Committee shall be governed by the same rules regarding meetings (including meetings by telephone conference or similar communications equipment), action without a meeting, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board. The Committee is authorized, but not obligated, to adopt its own rules of procedure not inconsistent with (a) any provision of this Charter, (b) any provision of the Bylaws of the Company, or (c) the laws of the state of Nevada.

Duties and Responsibilities

The Committee shall carry out the duties and responsibilities set forth below. These functions should serve as a guide with the understanding that the Committee may determine to carry out additional functions and adopt additional policies and procedures as may be appropriate in light of changing business, legislative, regulatory, legal, or other conditions. The Committee shall also carry out any other responsibilities and duties delegated to it by the Board of Directors from time to time related to the purposes of the Committee outlined in this Charter.

In discharging its oversight role, the Committee is empowered to study or investigate any matter of interest or concern that the Committee deems appropriate and shall have the sole authority to retain and terminate, without seeking Board approval, outside counsel, compensation and benefits consultants or other advisers for this purpose, including the authority to approve the fees payable to such counsel, consultants or other advisers and any other terms of retention or termination. The Company shall provide for appropriate funding as determined by the Committee for payment or compensation to any such counsel or adviser retained by the Committee.

If the Company no longer qualifies as a “smaller reporting company,” as defined by the SEC, the Committee may retain outside counsel, compensation and benefits consultants or other advisers only after taking into consideration the following six independence factors, as well as any other factors required by applicable exchanges and/or the Securities Exchange Act of 1934 and corresponding rules that may be amended from time to time:

  1. the provision of other services to the Company by the person that employs the compensation consultant, outside counsel or other adviser;
  1. the amount of fees received from the Company by the person that employs the compensation consultant, outside counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, outside counsel or other adviser;
  1. the policies and procedures of the person that employs the compensation consultant, outside counsel or other adviser that are designed to prevent conflicts of interest;
  1. any business or personal relationship of the compensation consultant, outside counsel or other adviser with a member of the Committee;
  1. any stock of the Company owned by the compensation consultant, outside counsel or other adviser; and
  1. any business or personal relationship of the compensation consultant, outside counsel, other adviser or the person employing the compensation consultant, outside counsel, or other adviser with an executive officer of the Company.

Setting Compensation for Executive Officers and Directors

  1. Establish and review the overall compensation philosophy of the Company.
  1. Review and approve the Company’s corporate goals and objectives relevant to the Chief Executive Officer of the Company (the “CEO”) and other executive officers’ compensation, including annual performance objectives.
  1. Evaluate the performance of the CEO and other executive officers in light of those goals and objectives and, based on such evaluation, review and approve the annual salary, bonus, stock options, and other benefits, direct and indirect, of the CEO and other executive officers.
  1. In determining the long-term incentive component of compensation for the CEO and other executive officers, the Committee should consider the Company’s performance and relative shareholder return, the value of similar incentive awards to CEOs and other executive officers at comparable companies, and the awards given to the Company’s CEO and other executive officers in past years. The Committee is not precluded from approving awards (with the ratification of the Board of Directors) as may be required to comply with applicable tax laws, such as Section 162(m) of the Internal Revenue Code of 1986, as amended.
  1. In connection with executive compensation programs:
    1. Review and recommend to the full Board of Directors, or approve, new executive compensation programs;
    2. Review on a periodic basis the operations of the Company’s executive compensation programs to determine whether they are properly coordinated and achieving their intended purposes;
    3. Establish and periodically review policies for the administration of executive compensation programs; and
    4. Take steps to modify any executive compensation program that yields payments and benefits that are not reasonably related to executive and corporate performance; provided, however that such steps taken by the Committee would not cause the Company to be in breach of any existing, properly approved contractual obligations.
  1. Establish and periodically review policies in the area of senior management perquisites.
  1. Consider policies and procedures pertaining to expense accounts of senior executives.
  1. Review and recommend to the full Board of Directors compensation of directors as well as director’s and officer’s indemnification and insurance matters.
  1. Review and make recommendations to the full Board of Directors, or approve, any contracts or other transactions with current or former executive officers of the Company, including consulting arrangements, employment contracts, change-in-control, severance, or termination arrangements, and loans to employees made or guaranteed by the Company.
  1. In connection with any shareholder advisory vote on the frequency with which the Company shall hold a shareholder advisory vote on the compensation of the Company’s named executive officers identified in the Company’s proxy statement (also known as “say-on-pay”), review and recommend for approval by the Board of Directors (a) the frequency that should be recommended to the Company’s shareholders and (b) after the vote, the frequency with which the Company should submit to the shareholders advisory “say-on-pay” votes going-forward, taking into account any prior shareholder advisory votes on such frequency.
  1. Review the results of any “say-on-pay” votes and consider whether to make or recommend adjustments to the Company’s executive compensation policies and practices as a result of such votes.

Monitoring Incentive and Equity-Based Compensation Plans

  1. Review and make recommendations to the Board of Directors with respect to the Company’s incentive-compensation plans and equity-based plans, and review the activities of the individuals responsible for administering those plans.
  1. Review and approve all equity compensation plans of the Company that are not otherwise subject to the approval of the Company’s shareholders.
  1. Review and make recommendations to the full Board of Directors, or approve, all types of awards pursuant to the Company’s equity-based plans and approve grants of equity and equity-based awards.
  1. Monitor compliance by executives with the rules and guidelines of the Company’s equity-based plans.
  1. Review and monitor employee pension, profit sharing, and benefit plans.
  1. Oversee risks relating to the Company’s compensation policies, practices and procedures.

Reports

  1. Prepare an annual report on executive compensation for inclusion in the Company’s proxy statement in accordance with applicable rules and regulations of the NYSE MKT (or any other national securities exchange on which the Company’s common stock is then principally listed and traded), SEC, and other applicable regulatory bodies, if so required.
  1. Report regularly to the Board of Directors with respect to matters that are relevant to the Committee’s discharge of its responsibilities and with respect to such recommendations as the Committee may deem appropriate. The report to the Board of Directors may take the form of an oral report by the Chairman or any other member of the Committee designated by the Committee to make such report.
  2. Maintain minutes or other records of meetings and activities of the Committee.

Last Revised as of February 24, 2016

Last Revised as of February 24, 2016

RELM WIRELESS CORPORATION

AUDIT COMMITTEE CHARTER

Purpose

The purpose of the Audit Committee (the “Committee”) of the Board of Directors of RELM Wireless Corporation (the “Company”) shall be as follows:

  1. To oversee the accounting and financial reporting processes of the Company and audits of the financial statements of the Company.
  2. To provide assistance to the Board of Directors with respect to its oversight of the following:
  • The integrity of the Company’s financial statements.
  • The independent registered public accounting firm’s qualifications and independence.
  • The performance of the Company’s internal audit function, if any, and independent registered public accounting firm.
  1. To prepare the report that Securities and Exchange Commission (“SEC”) rules require be included in the Company’s annual proxy statement.

Composition

The Committee shall consist of two or more members of the Board of Directors, each of whom is determined by the Board of Directors to be “independent” under the rules of the NYSE MKT or any other national securities exchange on which the Company’s common stock is then listed and Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 adopted pursuant to the Sarbanes-Oxley Act.

One director who is not independent as defined in the rules and regulations of the NYSE MKT and who satisfies the requirements of Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 may serve as a member of the Committee, in the following circumstances:

  • the director, other than in his or her capacity as a member of the Committee, the Board of Directors, or another Board committee, does not accept directly or indirectly any consulting, advisory, or other compensatory fee from the Company or any of its subsidiaries other than the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the Company so long as such compensation is not contingent in any way on continued service;
  • the director is not an affiliated person of the Company or any of its subsidiaries;
  • the director is not a current officer or employee of the Company or an immediate family member of a current officer or employee;
  • the Board determines, under exceptional and limited circumstances, that membership by the individual on the Committee is required by the best interests of the Company and its shareholders;
  • the Board of Directors discloses, in the Company’s next annual meeting proxy statement (or its next annual report on Form 10-K or its equivalent if the Company does not file an annual proxy statement) subsequent to such determination, the nature of the relationship and the reason for that determination;
  • no such person may serve as the Chairman of the Committee; and
  • no such person may serve on the Committee for more than two years.

No member of the Committee shall receive directly or indirectly any consulting, advisory, or other compensatory fees from the Company other than (1) compensation for service as a director of the Company, including reasonable compensation for serving on Board committees and regular benefits that other directors receive; and (2) a pension or similar compensation for past performance, provided that such compensation is not conditioned on continued or future service to the Company. In addition, no member of the Committee may be an affiliate of the Company or any subsidiary of the Company whether by being an officer or owning more than 10 percent of the Company’s voting securities.

Qualifications

All members of the Committee shall be able to read and understand fundamental financial statements (including a company’s balance sheet, income statement, and cash flow statement) and at least one member must either have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background, which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer, or other senior officer with financial oversight responsibilities or be an “audit committee financial expert” as defined by the SEC. Committee members may enhance their familiarity with finance and accounting by participating in educational programs conducted by the Company or by an outside organization.

Appointment and Removal

The members of the Committee shall be appointed by the Board of Directors. A member shall serve until such member’s successor is duly elected and qualified or until such member’s earlier resignation or removal.  The members of the Committee may be removed, with or without cause, by a majority vote of the Board of Directors at any time.

Chairman

Unless a Chairman is elected by the full Board of Directors, the members of the Committee shall designate a Chairman by the majority vote of the full Committee membership. The Chairman will chair all regular sessions of the Committee and set the agendas for Committee meetings.

Delegation to Subcommittees

In fulfilling its responsibilities, the Committee shall be entitled to delegate any or all of its responsibilities to a subcommittee of the Committee.

Meetings

The Committee shall meet as frequently as circumstances dictate, but at least on a quarterly basis. The Chairman of the Committee or a majority of the members of the Committee may call meetings of the Committee.  Any one or more of the members of the Committee may participate in a meeting of the Committee by means of conference call or similar communication device by means of which all persons participating in the meeting can hear each other.

All non-management directors who are not members of the Committee may attend meetings of the Committee, but may not vote. In addition, the Committee may invite to its meetings any director, member of management of the Company, and such other persons as it deems appropriate in order to carry out its responsibilities.  The Committee may also exclude from its meetings any persons it deems appropriate.

As part of its goal to foster open communication, the Committee shall periodically meet separately with each of management, the director of the internal auditing department, if any, and the independent registered public accounting firm to discuss any matters that the Committee or any of these groups believe would be appropriate to discuss privately. In addition, the Committee should meet with the independent registered public accounting firm and management periodically to review the Company’s financial statements in a manner consistent with that outlined in this Charter.

Duties and Responsibilities

The Committee shall carry out the duties and responsibilities set forth below. These functions should serve as a guide with the understanding that the Committee may determine to carry out additional functions and adopt additional policies and procedures as may be appropriate in light of changing business, legislative, regulatory, legal, or other conditions. The Committee shall also carry out any other duties and responsibilities delegated to it by the Board of Directors from time to time related to the purposes of the Committee outlined in this Charter.  The Committee may perform any functions it deems appropriate under applicable law, rules, or regulations, the Company’s Bylaws, and the resolutions or other directives of the Board, including review of any certification required to be reviewed in accordance with applicable law or regulations of the SEC.

In discharging its oversight role, the Committee is empowered to study or investigate any matter of interest or concern that the Committee deems appropriate. In this regard and as it otherwise deems appropriate, the Committee shall have the authority, without seeking Board approval, to engage and obtain advice and assistance from outside legal and other advisors as it deems necessary to carry out its duties.  The Committee also shall have the authority to receive appropriate funding, as determined by the Committee, in its capacity as a committee of the Board of Directors, from the Company for the payment of compensation to any independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review, or attest services for the Company; to compensate any outside legal or other advisors engaged by the Committee; and to pay the ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

The Committee shall be given full access to the Company’s internal audit group, if any, Board of Directors, corporate executives, and independent registered public accounting firm as necessary to carry out these responsibilities. While acting within the scope of its stated purpose, the Committee shall have all the authority of the Board of Directors, except as otherwise limited by applicable law.

Notwithstanding the foregoing, the Committee is not responsible for certifying the Company’s financial statements or guaranteeing the independent registered public accounting firm’s report. The fundamental responsibility for the Company’s financial statements and disclosures rests with management and the independent registered public accounting firm. It also is the job of the Chief Executive Officer and senior management, rather than that of the Committee, to assess and manage the Company’s exposure to risk.

Documents/Reports Review

  1. Discuss with management and the independent registered public accounting firm, prior to public dissemination, the Company’s annual audited financial statements and quarterly financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and discuss with the independent registered public accounting firm the matters required to be discussed by the Public Company Accounting Oversight Board’s standards, including the matters required by Statement on Auditing Standard No. 1301, Communications with Audit Committees, and other matters, if any, brought to the attention of the Committee by employees or officers of the Company.
  2. Discuss with management and the independent registered public accounting firm, prior to the Company’s filing of any quarterly or annual report, (a) whether any significant deficiencies in the design or operation of internal control over financial reporting exist that could adversely affect the Company’s ability to record, process, summarize, and report financial data; (b) the existence of any material weaknesses in the Company’s internal control over financial reporting; and (c) the existence of any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
  3. Discuss with management and the independent registered public accounting firm the Company’s earnings press releases (paying particular attention to the use of any “pro forma” or “adjusted” non-GAAP information), as well as financial information and earnings guidance provided to analysts and rating agencies.
  4. Discuss with management and the independent registered public accounting firm the Company’s major financial risk exposures, the guidelines and policies by which risk assessment and management is undertaken, and the steps management has taken to monitor and control risk exposure.

Independent Registered Public Accounting Firm

  1. Appoint, retain, compensate, evaluate, and terminate any registered public accounting firm engaged by the Company for the purpose of preparing or issuing an audit report or performing other audit, review, or attest services for the Company and, in its sole authority, approve all audit engagement fees and terms as well as all non-audit engagements with the registered public accounting firm.
  2. Oversee the work of any independent registered public accounting firm engaged by the Company for the purpose of preparing or issuing an audit report or performing other audit, review, or attest services for the Company, including the resolution of any disagreements between management and the independent registered public accounting firm regarding financial reporting.
  3. Pre-approve, or adopt procedures to pre-approve, all audit, audit related, tax, and other services permitted by law or applicable SEC regulations (including fee and cost ranges) to be performed by the independent registered public accounting firm. Any pre-approved services that will involve fees or costs exceeding pre-approved levels will also require specific pre-approval by the Committee.  Unless otherwise specified by the Committee in pre-approving a service, the pre-approval will be effective for the 12-month period following pre-approval.  The Committee will not approve any non-audit services prohibited by applicable SEC regulations or any services in connection with a transaction initially recommended by the independent registered public accounting firm, the purpose of which may be tax avoidance and the tax treatment of which may not be supported by the Internal Revenue Code and related regulations.
  4. To the extent it deems it appropriate, delegate pre-approval authority to the Chairman of the Committee or any one or more other members of the Committee provided that any member of the Committee who has exercised such delegation must report any such pre-approval decisions to the Committee at its next scheduled meeting. The Committee will not delegate the pre-approval of services to be performed by the independent registered public accounting firm to management.
  5. Require that the independent registered public accounting firm, in conjunction with the Chief Financial Officer, be responsible for seeking pre-approval for providing services to the Company and that any request for pre-approval must inform the Committee about each service to be provided and must provide detail as to the particular service to be provided.
  6. Inform each independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or to perform audit, review, or attest services for the Company that such firm shall report directly to the Committee.
  7. Review, at least annually, the qualifications, performance, and independence of the independent registered public accounting firm. In conducting its review and evaluation, the Committee should do the following:
  • At least annually obtain and review a report by the Company’s independent registered public accounting firm describing (i) the accounting firm’s internal quality-control procedures; (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the accounting firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the accounting firm, and any steps taken to deal with any such issues; and (iii) all relationships between the independent registered public accounting firm and the Company.
  • Ensure the receipt from the independent registered public accounting firm of a formal written statement delineating all relationships between the accounting firm and the Company, consistent with applicable standards.
  • Actively engage in a dialogue with the independent registered public accounting firm with respect to any disclosed relationships or services that may impact the objectivity and independence of such accounting firm.
  • Take, or recommend that the full Board of Directors take, appropriate action to oversee the independence of the independent registered public accounting firm.
  • Ensure the rotation of the lead audit (or coordinating) partner at least every five years, and consider whether there should be regular rotation of the accounting firm itself.
  • Confirm with the independent registered public accounting firm that the lead (or coordinating) audit partner, the concurring (or reviewing) partner, and each other active audit engagement team partner satisfies the rotation requirements of Rule 2-01(c)(6) of Regulation S-X.
  • Take into account the opinions of management and the Company’s internal auditor (or other personnel responsible for the internal audit function), if any.

Financial Reporting Process

  1. In consultation with the independent registered public accounting firm, management, and the internal auditor, if any, review the integrity of the Company’s financial reporting processes, both internal and external. In that connection, the Committee should obtain and discuss with management and the independent registered public accounting firm reports from management and the independent registered public accounting firm regarding (a) all critical accounting policies and practices to be used by the Company and the related disclosure of those critical accounting policies under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; (b) analyses prepared by management and/or the independent registered public accounting firm setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including all alternative treatments of financial information within generally accepted accounting principles that have been discussed with the Company’s management, the ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the independent registered public accounting firm; (c) all alternative treatments of financial statements within generally accepted accounting principals that have been discussed with the Company’s management, the ramifications of the use of alternative disclosures and treatments, and the treatment preferred by the independent registered public accounting firm; (d) major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles; (e) major issues as to the adequacy of the Company’s internal controls and any specific audit steps adopted in light of material control deficiencies; (f) issues with respect to the design and effectiveness of the Company’s disclosure controls and procedures, management’s evaluation of those controls and procedures, and any issues relating to such controls and procedures during the most recent reporting period; (g) the effect of regulatory and accounting initiatives, as well as any off-balance sheet structures on the financial statements of the Company; (h) any significant matters arising from any audit, including audit problems and difficulties, whether raised by management, the internal auditor, if any, and the independent registered public accounting firm, relating to the Company’s financial statements; and (i) any other material written communications between the independent registered public accounting firm and the Company’s management.
  2. Review periodically the effect of regulatory and accounting initiatives, as well as any off-balance sheet structures, on the financial statements of the Company.
  3. Review with the independent registered public accounting firm any audit problems or difficulties encountered and management’s response thereto. In this regard, the Committee will regularly review with the independent registered public accounting firm (a) any audit problems or other difficulties encountered by the accounting firm in the course of the audit work, including any restrictions on the scope of the independent registered public accounting firm’s activities or on access to requested information, and any significant disagreements with management and (b) management’s responses to such matters.  Without excluding other possibilities, the Committee may review with the independent registered public accounting firm (i) any accounting adjustments that were noted or proposed by the accounting firm but were “passed” (as immaterial or otherwise), (ii) any communications between the audit team and the accounting firm’s national office respecting auditing or accounting issues presented by the engagement, and (iii) any “management” or “internal control” letter issued, or proposed to be issued, by the independent registered public accounting firm to the Company.
  4. Obtain from the independent registered public accounting firm that the audit of the Company’s financial statements was conducted in a manner consistent with Section 10A of the Securities Exchange Act of 1934, which sets forth procedures to be followed in any audit of financial statements required under the Securities Exchange Act of 1934.
  5. Discuss the scope of the annual audit and review the form of the opinion the independent registered public accounting firm proposes to issue.
  6. Review and discuss with management and the independent registered public accounting firm the responsibilities, budget, and staffing of the Company’s internal audit function, if any.

Legal Compliance/General

  1. Review periodically, with the Company’s counsel, any legal matter that could have a significant impact on the Company’s financial statements.
  2. Discuss with management and the independent registered public accounting firm the Company’s guidelines and policies with respect to risk assessment and risk management. The Committee will discuss the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures.
  3. Set clear hiring policies for employees or former employees of the independent registered public accounting firm. At a minimum, these policies should provide that any accounting firm may not provide audit services to the Company if the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Controller, or any person serving in an equivalent position for the Company was employed by the accounting firm and participated in any capacity in the audit of the Company within one year of the initiation of the current audit.
  4. Establish procedures for (i) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
  5. Oversee compliance with the Company’s Code of Business Conduct and Ethics and the Code of Ethics for the CEO and Senior Financial Officers.
  6. Review and reassess the adequacy of this Charter on an annual basis and recommend to the Board of Directors any modifications or changes hereto for approval by the Board.

Reports

  1. Prepare all reports required to be included in the Company’s proxy statement pursuant to and in accordance with applicable rules and regulations of the SEC.
  2. Report regularly to the full Board of Directors. In this regard, the Committee should review with the full Board any issues that arise with respect to the quality or integrity of the Company’s financial statements, the performance and independence of the Company’s independent registered public accounting firm, and the performance of the internal audit function, if any.
  3. The Committee shall provide such recommendations as the Committee may deem appropriate. The report to the Board of Directors may take the form of an oral report by the Chairman or any other member of the Committee designated by the Committee to make such report.
  4. Maintain minutes or other records of meetings and activities of the Committee.

Limitation of Audit Committee’s Role

With respect to the foregoing responsibilities and processes, the Committee recognizes that the Company’s financial management, including the internal audit staff, if any, as well as the independent registered public accounting firm have more time, knowledge, and detailed information regarding the Company than do Committee members. Consequently, in discharging its oversight responsibilities, the Committee will not provide or be deemed to provide any expertise or special assurance as to the Company’s financial statements or any professional certification as to the independent registered public accounting firm’s work.

Last Revised as of February 24, 2016