Corporate Governance Guidelines

General Purpose and Scope

These Corporate Governance Guidelines are intended to foster an understanding of how Telular views the importance and scope of corporate governance. They address some of the specific issues that will need to be considered in the Board of Directors and executive managements’ exercise of their corporate governance responsibilities. They are subject to Telular’s Certificate of Incorporation and Bylaws, as well as applicable law and regulations. These guidelines are not binding legal requirements or regulations, but are to guide and assist the Board of Directors, executive management, other employees, shareholders, customers, and other stakeholders in Telular. They do not limit the authority or discretion of the Board of Directors or executive management team to take action in any specific instance, even where that action may be interpreted as contrary or an exception to the guidelines. They do not confer rights on any person or entity.

Role of Board of Directors

The business of Telular is managed under the direction of the Board. The Board selects and provides advice and counsel to the Chief Executive Officer and generally oversees management. The Board reviews and discusses the strategic direction of the Company and monitors the Company’s performance against goals the Board has established with management.

Number of Directors

There will be no more than 6-7 Directors. The Nominating and Governance Committee has responsibility for periodically reviewing Board size.

Terms

All Directors serve one (1) year terms and are elected at the annual shareholder’s meeting.

Tenure and Retirement from the Board

Directors shall not serve a term that extends beyond the annual meeting following a Director’s 70th birthday, unless a 1 (one) year extension is approved by the Board

Director Qualifications.

Members of the Company’s Board of Directors are subject to the following qualifications:

A majority of the members of Telular’s Board of Directors are “independent” directors, as further defined in these Guidelines.
Members of any Committee of the Board of Directors meet the qualifications established for that Committee.
No person having been convicted of a felony crime may be elected to, or continue in, the membership of the Board of Directors.
No member of the Board of Directors holds membership on the board of directors of more than four for-profit companies, including both private and public companies, while on the Telular Board of Directors without prior approval of the Chairman of the Board (or if the individual in question is the Chairman, then approval must come from the Chairman of the Nominating and Governance Committee).

Director Independence.

Members of the Board of Directors are considered “independent” if they (i) meet the independence and experience requirements of The NASDAQ National Market (“NASDAQ”), Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”), (ii) shall not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years, and (iii) have no relationship that would interfere with the exercise of his or her independent judgment in carrying out the responsibilities of a director. In exercising its judgment, the Board of Directors uses the following standards, in addition to considering any other factors available to it:

the director has no material relationship with Telular or any of its affiliates.
the director has not been employed by Telular or any of its affiliates for the current year or any of the past three years.
the director has not accepted, nor has an immediate family member who has accepted any compensation or payments from Telular or any of its affiliates in excess of $60,000 during the current or previous fiscal year, other than compensation for board service.
the director is not a member of the immediate family of an individual who is, or has been in any of the past three years, employed by Telular or any of its affiliates as an executive officer. Immediate family includes a person’s spouse, parents, children, siblings, mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law, and anyone who resides in such person’s home.
the director is not a partner in, or a controlling shareholder or an executive officer of, any business organization to which Telular made, or from which the corporation received, payments (other than those arising solely from investments in the corporation’s securities) that exceed 5% of Telular’s or such other business organization’s consolidated gross revenues for that year, or $200,000, whichever is more, in the current or any of the past three years.
the director is not employed as an executive of another entity where any of the Telular’s or its affiliates’ executives serve on that entity’s compensation committee.

Director Responsibilities.

Members of the Telular Board of Directors carry the following responsibilities, in addition to any others that are imposed by applicable law, regulation, corporate action, or other arrangement:

attendance at properly called Telular board and committee meetings
advance review of meeting materials provided for such board and committee meetings
become familiar with the condition and operations of the Company and the market environment in which it operates
where circumstances warrant it, active analysis and questioning of reports, opinions, information and statements of the corporations’ officers, legal counsel, accountants, employees, and board committees
where circumstances warrant it, actively exercising access to Telular’s officers, legal counsel, accountants, employees, and board committees
compliance with Telular’s certificate of incorporation, bylaws, policies and procedures
compliance with Telular’s Business Code of Ethics
independent judgment on behalf of Telular
loyalty to Telular’s interests
due care in the deliberation and prosecution of Telular business
reasonable, active efforts to identify and avoid actual and potential conflicts of interest, and the disclosure to Telular’s legal counsel and its Governance Committee of actual or significant potential conflicts of interest
compliance with applicable law in the deliberation and prosecution of Telular business
seek prompt legal advice, through the Company’s general counsel where appropriate, and where circumstances dictate, through independent counsel as authorized under an applicable Board Committee’s charter
oversight of philanthropic and political activities of the Company
oversight of crisis response and management planning for the Company
oversight of company practices and policies relating to employee health, safety and well-being
oversight of all corporate governance matters, including board structure, board committee structure and charters, Company business ethics

Committees of the Board of Directors

The Board has Audit, Compensation, and Nominating and Governance Committees all of which are composed of independent Directors. The requirements for committee membership are detailed in the committee skills matrix provided by the Nominating and Governance Committee. Each committee has a written charter that is reviewed and updated periodically. The chair of each committee determines the agenda and the frequency and length of each committee meeting. In the absence of the committee chair, the most senior member of the committee will chair the meeting.

The Nominating and Governance Committee annually reviews Committee assignments and makes recommendations to the Board of Directors. The Board does not feel that rotations at strict intervals should be mandated in view of the experience and expertise needed on the Board’s committees.

Board’s Deliberations, Performance, and Compensation.

The Board has at least 4 meetings per year with sufficient time at each meeting to devote to important matters. In addition to the quarterly meetings, the Board will hold scheduled and ad hoc telephonic meetings as are required by the business.

The Board is fully informed in advance of all major proposals and information important to the Board’s understanding of the business is distributed to all Directors prior to the meeting.

Members of the Board have full access, on request, to members of the Telular management team. Members of the Board cooperate and coordinate with one another and with management to use such access efficiently and effectively, avoiding unnecessary duplication of board or management efforts.

Director compensation is to be competitive with compensation for directors in similar-size companies in the United States. The Compensation Committee proposes the form and amount of director compensation, and the full Board approves any final director compensation and benefit. In general, the Board believes that director compensation should be in part tied to corporate performance, and that the then most appropriate form(s) of equity compensation should be included as a component of director compensation, to help align the interests of the directors, the Company, and its shareholders. The Governance Committee raises and reviews questions as to directors’ independence, if directors’ fees and emoluments should exceed what is customary. The entire Board critically evaluates each of these matters when determining the form and amount of director compensation, and the independence of a director. Directors who are also full-time employees of the Company are not considered “independent,” and are also not paid additional compensation for service as directors.

Stock Ownership Guidelines

Formal stock ownership guidelines have been established by the compensation committee, and can be found under the “Investor” section of the Telular web site. The Compensation Committee shall review compliance with these stock ownership guidelines on an annual basis.

Director Orientation and Continuing Education.

The board, with the assistance of Telular’s secretary, provides copies of orientation materials, or access to such materials, to each new director, typically including items such as the following:

Articles of incorporation with amendments
Bylaws
List of directors and related contact information
Director committee assignments
List of Board committees and their charters
List of officers and contact information
Home and business addresses of all officers and directors
Relevant company policies (e.g., insider trading, disclosure policy)
Memoranda regarding SEC reporting requirements for BOD and officers
Company Code of Business Ethics
Schedule of regular board and shareholder meetings
Information on director fees, expense reimbursement
Indemnification agreements and related information
Company’s recent SEC filings

The Board and the Company also support the continuing education of directors. The Secretary of the Company collects educational or topical publications and articles, and notice of educational opportunities, that relate to the Board’s duties and responsibilities, as provided by directors and officers of the Company and as received from other sources, and screens and distributes them to the Board or appropriate Committee members on at least a quarterly basis.

Annual Evaluation of the Chief Executive Office and Management Succession.

The Compensation Committee annually evaluates the performance of the Chief Executive Officer in leading the organization taking into account the CEO’s performance against corporate and individual goals as agreed upon by the committee and approved by the Board. The Compensation Committee shall determine and recommend the CEO total compensation which includes base salary and annual and long term incentive opportunities and awards. The recommendation from the Committee shall be approved by the entire Board.

The board establishes, maintains, and periodically reviews succession planning that includes policies and principles for CEO selection and performance review, as well as policies regarding succession in the event of an emergency or the retirement of the CEO.

Annual Performance Evaluation of the Board.

The board conducts a self-evaluation at least annually to determine whether it and its committees are functioning effectively. The self-evaluation includes a review of adherence to these Corporate Governance Guidelines.